Active vs. Passive
Active investment means that securities or particularly stocks are actively picked out from the stock exchange to be included in a portfolio. That means the stocks in the portfolio are held in a shorter period and the buying-selling process are continuously done with an aim to beat the market, meaning to get the alpha returns.
Passive investment means that it is not much about getting the excess returns but rather more on following the movement of a particular index. The investment is more focused on getting the growth returns in a longer term. Most ETFs follow an index of a particular exposure such as geographical location, sector specific or thematic. There are many forms of index available today by many index providers.
There are pros and cons for both active and passive strategies. The choice between active, passive or a mixture of both depends on one’s investment objective, risk appetite, investment horizon as well as other factors