Passive Investing


DEFINITION of 'Passive Investing'

An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long-term appreciation and limited maintenance.

BREAKING DOWN 'Passive Investing'

Also known as a buy-and-hold or couch potato strategy, passive investing requires good initial research, patience and a well diversified portfolio.

Unlike active investors, passive investors buy a security and typically don't actively attempt to profit from short-term price fluctuations. Passive investors instead rely on their belief that in the long term the investment will be profitable.

  1. Capital Markets

    Capital markets are markets for buying and selling equity and ...
  2. Index Fund

    An index fund is a type of mutual fund with a portfolio constructed ...
  3. Active Management

    The use of a human element, such as a single manager, co-managers ...
  4. Active Investing

    An investment strategy involving ongoing buying and selling actions ...
  5. Passive Management

    A style of management associated with mutual and exchange-traded ...
  6. Tracker Fund

    An index fund that tracks a broad market index or a segment thereof. ...
Related Articles
  1. Mutual Funds & ETFs

    3 Mutual Funds With the Lowest Expense Ratios

    Learn about the three mutual funds that have one of the lowest expense ratios and focus on different investment strategies of investing in bonds and stocks.
  2. Mutual Funds & ETFs

    Top 4 European Stock Mutual Funds

    Learn about four of the largest and most popular European stock mutual funds in the market, including options for active and passive investors.
  3. Mutual Funds & ETFs

    ETF Analysis: iShares US Basic Materials

    Learn about the iShares US Basic Materials exchange-traded fund, which invests in the equities of chemicals, metals and industrial gas companies.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares S&P Mid-Cap 400 Growth

    Learn about the iShares S&P Mid-Cap 400 Growth exchange-traded fund, which invests in U.S. equities of mid-cap companies that show above-average growth rates.
  6. Mutual Funds & ETFs

    ETF Analysis: PowerShares Dynamic Pharmaceuticals

    Learn about the PowerShares Dynamic Pharmaceuticals exchange-traded fund, which specializes on investing in pharmaceutical companies.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares US Medical Devices

    Learn about the iShares U.S. Medical Devices exchange-traded fund, its characteristics, suitability and recommendations for investors.
  8. Mutual Funds & ETFs

    ETF Analysis: iShares NASDAQ Biotechnology

    Learn about the iShares Nasdaq Biotechnology exchange-traded fund, which offers one of the most diversified ways of investing in the biotechnology sector.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares FTSE/Xinhua China 25

    Learn about iShares FTSE/Xinhua China 25 and its asset allocation and how investing in this fund comes with heightened risks of emerging market risk.
  10. Mutual Funds & ETFs

    ETF Analysis: Market Vectors Russia

    Learn about Market Vectors Russia ETF, its top holdings, as well as cyclical and political risks associated with investing in the Russian market.
  1. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  2. What is the difference between a smart beta fund and an index fund?

    An index fund often uses the market capitalization of component companies as the basis for constructing the index. In contrast, ... Read Full Answer >>
  3. Is the drugs sector better suited for active or passive investment?

    Active management and passive management represent two vastly different approaches to investing. Active investors keep their ... Read Full Answer >>
  4. Can hedge fund returns be replicated?

    You can replicate hedge fund returns to a degree but not perfectly. Most replication strategies underperform hedge funds ... Read Full Answer >>
  5. Does mutual fund manager tenure matter?

    Mutual fund investors have numerous items to consider when selecting a fund, including investment style, sector focus, operating ... Read Full Answer >>
  6. Why do financial advisors dislike target-date funds?

    Financial advisors dislike target-date funds because these funds tend to charge high fees and have limited histories. It ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center