Active vs. Passive

• The two rival investment styles, commonly known as "active management" and "passive management," are opposing portfolio strategies used by different investment managers. Investment managers who use the active portfolio investment strategy believe in their ability to beat the market by actively picking and choosing investments, while realizing the potentially higher risk for failing to deliver expected results. Under the passive investment style, managers passively monitor the portfolio's performance, making changes only when needed. Also, the passive portfolio strategy has more diversified portfolio investments.
  
  

Capital Appreciation vs. Income Stream

• Based on the analysis of investment objectives and the goals of their clients, investment managers advise clients to pursue a portfolio strategy focusing on either "capital appreciation" or "income stream." A strategy to achieve capital appreciation may require longer investment time and higher risk tolerance from investors. A strategy to produce income stream through dividends or interest can satisfy investors' immediate needs for money, but may deliver lower total return over the long run.
  
  

Growth vs. Value

• The portfolio strategies of "growth" and "value" represent two different investment philosophies. While the growth strategy aims to capture an investment's momentum, the value strategy focuses on uncovering an investment's hidden value. The growth strategy is often considered to be an aggressive approach, encouraging investment mangers to buy expensive stocks that could either rapidly grow into big rewards or quickly fall out of favor. The value strategy is viewed more as a conservative method, allowing investment managers to look for low-priced stocks, relative to their earnings, that may one day realize their intrinsic value.
  
  

General Economy vs. Individual Companies

• The portfolio strategy that follows the general economy is regarded as a "top-down" strategy, while the strategy focusing on individual companies is seen as a "bottom-up" strategy. The top-down portfolio strategy bases investment selections on the conditions of the general economy. Investment managers choose companies in the sectors and industries that can benefit from current developments in the economy, and avoid those that may end up on the short end of the economy. The bottom-up portfolio strategy locates investments based on the merits of individual companies, even if the direction of the economy is disadvantageous to the sector and industry in which targeted companies operate. There are always companies that will succeed even if their sector and industry fail in general.