Active management is a strategy where investors or portfolio managers regularly buy and sell assets to try to achieve better returns than the overall market. Instead of holding investments for the long term, they make frequent decisions based on market conditions, trends, and analysis.

The goal is to find opportunities where prices don’t reflect the true value of an asset. Active managers rely on research, data, and experience to identify when to enter or exit a trade. Many aim to outperform benchmarks like the S&P 500 by reacting quickly to changes in the market.

For individuals, active management can simply mean adjusting their investments often based on what they think will happen next. In a professional setting, it refers to fund managers who constantly monitor the market and shift investments to try to get the best possible results.

This approach is different from passive investing, where investors follow an index and avoid frequent trades. Passive strategies tend to have lower fees and are based on the idea that the market is already priced efficiently.

Active management usually involves higher costs, more risk, and more time. But for some investors, the chance to outperform the market and stay flexible makes it a worthwhile choice.

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