7.6k views
2 votes
A portfolio manager chooses the securities in the portfolio in an attempt to replicate a benchmark. What type of investment strategy is this?

User Bojangles
by
7.7k points

1 Answer

4 votes

Final answer:

Passive investing involves replicating a benchmark to match its performance and is commonly done through index funds.

Step-by-step explanation:

The investment strategy that involves selecting securities in a portfolio to replicate a benchmark is called passive investing. In this strategy, a portfolio manager aims to match the performance of a specific index or benchmark, such as the S&P 500, rather than actively trying to outperform the market. One common approach to passive investing is investing in index funds, which are mutual funds that track the performance of a specific index. Index funds are designed to closely mimic the overall behaviour of the stock market, providing investors with broad exposure and diversification.

User Paul Spaulding
by
7.8k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.