Passive portfolio management involves investing in funds which mirror the behavior of an underlying index such as the Sensex or NIFTY. Since your money gets invested in constituents of the underlying index, the costs of these investment products are significantly lower as you don’t need a fund management team to choose investments. However,these investments will deliver returns in line with the underlying benchmark (typically between 12% to 16%).
Active Portfolio Management involves determining asset classes and securities or stocks under each asset class based on their potential to generate superior returns. Identifying these individual securities and their allocation needs in depth research on the market and the individual securities which is performed by Investment Advisors who have experience analyzing investment options.