It is easy to find oneself in the midst of a raging debate about which of the two types of fund management approaches - Active and Passive - is best, and the arguments are generally skewed towards the approach chosen by the company for which the writer works.
What is an active and a passive fund management approach, you may be asking?
Actively managed funds have a fund manager who delivers returns based on specific mandate. That person is responsible for selecting which investments to make, when to sell those investments amongst a myriad of other responsibilities. Passive funds on the other hand, simply track a certain index and are not actively managed. As a result of the human capital required to constantly manage the funds under active management, the fees charged by these asset managers are generally higher than those charged by their passive alternatives.