Active Management (or active investing) is an investing strategy wherein brokers or fund managers aim to profit from both bear and bull markets through trading financial assets with market inefficiencies. Active managers rely on investment analysis, research, and forecasts to determine which assets to buy, hold, or sell. The overall strategy points to profiting through reaching a target return or outperforming the overall market.
On the surface level, active management is the act of buying and selling assets when good market opportunities arise. In a broader sense, it refers to a group of brokers that aim to profit out of trading a select group of securities. The success rate of this investing strategy is heavily dependent on the active managers’ interpretation of the market. Hence, a close monitoring of market trends is essential to assess which assets have market inefficiencies to increase the chances of making profits.