Active Investment Management

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So how do you choose effective investment management? Advertising campaigns suggest that it is based on previous track records, but securities regulators require all mutual fund companies to clearly indicate in the disclaimers that past performance is not indicative of future performance.

So what does Active Management mean?

Active Management means taking an active role in the ongoing process of investment selection and risk management with the objective of improving a portfolio’s risk/reward relationship. The active management strategies used by our investment partners are diverse, and utilize a broad range of securities including mutual funds, variable annuities, equity baskets, index-linked, exchange-traded securities, futures and other innovative products.

Active management (also called active investing) refers to a portfolio management strategy where the manager makes specific investments with the goal of outperforming an investment benchmark index. Investors or mutual funds that do not aspire to create a return in excess of a benchmark index will often invest in an index fund that replicates as closely as possible the investment weighting and returns of that index; this is called passive management. Active management is the opposite of passive management, because in passive management the manager does not seek to outperform the benchmark index.

Ideally, the active manager exploits market inefficiencies by purchasing securities (stocks etc.) that are undervalued or by short selling securities that are overvalued. Either of these methods may be used alone or in combination. Depending on the goals of the specific investment portfolio or mutual fund, active management may also serve to create less volatility (or risk) than the benchmark index. The reduction of risk may be instead of, or in addition to, the goal of creating an investment return greater than the benchmark.

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    Disclosure

    Einar Lisborg is dually licensed under the applicable provincial Securities Act and Regulations for the sale of mutual funds, and under the Financial Institutions Act for the sale of insurance products. He is also authorized to provide deposit instruments. You may be dealing with more than one company depending on the products and services provided. Networth Financial Corp. is responsible only for the business licensed under Provincial Securities Act & Regulations. It does not supervise other business. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Segregated fund may have various maturity and death benefit guarantees but care should be taken to read the Information Folder in order to determine specific details for the funds you purchase.