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Active vs. Passive Investing

Written by Singlife | 28 Apr 2021 |

Did you know that Grow is Investment-Linked Policy (ILP) whose investment portfolios are actively invested while ETFs and roboadvisors are passively invested?

In this article, we will answer two things:

  1. How did (actively-managed) Grow portfolios perform in March 2021?
  2. What is the difference between active and passive investing?

How Did Our Actively Managed Portfolios Perform This March?

Click here to find out how our Grow portfolios fared this March!

Active and Passive Investing are two different investment strategies.

Active Management

As the names suggest, active investing usually involves more trades (i.e. buying and selling of shares) than passive investing.

An actively-managed portfolio is managed by portfolio managers (in Grow’s case, Aberdeen Standard Investments) who make investment decisions based on their experience, market research, and expert forecasting.

They take note of extrinsic factors too, like changing political climates, things like vaccine roll-outs as well as other wider factors that may impact specific companies or the market at large.

Passive Management

If you intend to purchase passively-managed asset classes like ETFs or mutual funds, these are passively managed because they take a basket of stocks (often randomly selected) that parallel the returns of the market as a whole.

The creator of this index portfolio is a portfolio manager, too, and their goal is to make the index as representative of the market as possible. This is to say that if that market does well on aggregate, so will your index portfolio.

However, if only certain segments of the market do well, the index averages this out.

Because this investment strategy is not actively buying or selling, but simply pegged to the market at large, the management fees assessed on passive portfolios or funds are often lower than active management strategies.

Check out our March 2021 factsheet now!

 


Note that the performance for your Grow portfolio is not guaranteed and the value of the units and the income accrued to the units (if any) may fall or rise.

Grow is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg). This advertisement has not been reviewed by the Monetary Authority of Singapore.