Passively-Managed Funds Definition

Dictionary of Financial Terms

This term generally refers to index funds. The manager is not actually exercising discretion in his choice of stocks. Rather, he is investing in a basket of stocks that mirrors a predetermined index, like the S&P 500.

Because there's less work involved, and little portfolio turnover, passive management generally generates less in expenses and taxes than active management. At the same time, their goal is to match the index, not beat it. Most well known for its passive or index funds: Vanguard.

Definitions of Financial Terms