Passive and active investments are two different investment approaches. Put simply, passive investment involves tracking an index or benchmark (i.e. the ASX200) and replicating its returns and yield.

These investments are generally simple and inexpensive –they sometimes get called “set and forget” strategies. If a fund manager has an active investment strategy, they use their skill and knowledge to ‘beat’ the market and earn excess returns for their clients. Although active investing may sound simple – its incredibly complex and hard to achieve, and can be relatively expensive.