Why Active Management May Not Be Suitable for Your Investment Portfolio
Reasons Active Management May Not Be Ideal:
1. High Fees: Active management typically incurs higher fees compared to passive strategies, impacting overall returns.
2. Inconsistent Performance: Active managers often struggle to consistently beat the market, leading to subpar results.
3. Emotional Bias: Emotional decision-making by active managers can negatively impact investment decisions.
4. Lack of Diversification: Active management may result in concentrated portfolios, increasing risk.
5. Market Timing Challenges: Timing the market correctly is difficult, and active managers may underperform during market downturns.
6. Tax Inefficiency: Active trading can lead to higher capital gains taxes, reducing net returns.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.