Active Manager

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Active Manager

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A fund manger who seeks to achieve higher returns than the general market index (e.g. the all
ordinaries index for Australian shares). Instead of trying to follow the market, they actively seek out
opportunities to beat the market. Opposite of a passive (index) manager.
Investing with an active manager may involve:

  •  higher fees because the fund buys and sells more often
  •  a reliance on the particular skill of the manager
  •  potential to achieve returns above the benchmark and so with that, higher volatility

Common types of active fund managers are:
i. value managers
A value manager seeks to identify and buy stocks when they are under-priced and to take profits
when they become overvalued i.e. they take advantage of situations when shares trade above or
below their fair value.
ii. growth managers
A growth manager focuses on the expected future growth of a company’s earnings. Growth
managers focus less on current price and more on the potential value of an investment.