Passive Investing
Definition
What is Passive Investing?
An approach that seeks to track a market indexAn index designed to measure a market or market segment. or rule-based portfolioThe complete collection of investments owned by an investor or managed under one mandate. with limited discretionary trading.
Example in practice
How This Looks in Practice
An index fundA fund designed to track the holdings and performance of a stated market index. holds the companies in its benchmarkA reference index or rate used to evaluate a fund's performance. rather than trying to select winners.
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Related Terms
Principal
The original amount of money invested or lent, excluding later returns.
Investment FundamentalsCapital
Money or other resources committed to produce income, growth, or another economic benefit.
Investment FundamentalsInvestment
An asset or commitment of money made with the expectation of future income, growth, or both.
Asset ClassesAsset
Anything with economic value that can be owned or controlled.