Active management (also known as active investing) is a practice used by fund managers or brokers to trade financial assets with the intention of making money in both bull and bear markets. In order to achieve a target return or outperform a specific index, such as the S&P 500, active managers typically look for market inefficiencies. On a personal level, active management is just the process of routinely purchasing and selling assets in response to ostensibly favorable market possibilities. But in a broader sense, active management refers to a team of brokers or managers who aim to maximize profits by dealing in a certain set of assets. Active management typically relies on analytical research and investment choices. Active managers think they can therefore somehow outperform the market. According to the efficient-market hypothesis (EMH), there aren't many inefficiencies that may be taken advantage of because the price of an asset at the moment reflects all the information that is currently known about it. As a result, an active investing strategy's success rate is greatly influenced by the managers' individual interpretations of the market and, consequently, by their accuracy in making market predictions. Active managers must continuously monitor market developments in order to improve their chances of placing profitable deals. The passive investing approach, often known as indexing, is a counterbalance to active management. It entails creating a portfolio of long-term investments that won't be actively exchanged, to put it briefly. Instead, the managers or brokers will construct a portfolio that is frequently dependent on an index's performance. In terms of asset selection, this means that passive management is mostly free from human error. Mutual and exchange-traded funds (ETFs) are frequently related to indexing methodologies. Since active management entails more trading expenses and risks, its management costs are typically substantially higher than those of passive management techniques. Indexing systems have historically outperformed active investing, which could account for the recent rise in interest in passive management.