Active vs. Passive Investing: Understanding the Difference
Active Investing While more plans have shifted to passive investing in recent years thanks to its long-term, lower-cost structure, experts argue there are advantages to including actively managed investment options in defined contribution (DC) plan investment lineups as well. Josh Cohen, head of institutional defined contribution at PGIM, describes active management as a more hands-on approach, where an asset manager makes decisions about buying or selling a fund’s underlying holdings based on performance expectations. “[Asset managers] can use quantitative approaches to determine securit...