Investment Analysis essay for the exam Example | Topics and Well Written Essays - 2250 words

investiture Analysis for the exam - Essay ExampleIn actively managed portfolios, fund managers do not conceptualize that market is always efficient and they are always eager to make use of such twin in pricing that does not discount the teaching completely. If active fund manager remains prospered in identifying such opportunities, it is doable to make above average returns without exposing to high(prenominal) systematic risk and thus, it is possible to outperform the market through actively managed portfolios. Information always continues to flow in the market and prices limit on fluctuating. Sometimes the information is stock specific and sometimes, some macroeconomic factors may provide committal to the market.Disadvantage of actively managed fund is that these bills have higher expense ratios. They also acquit higher taxes as they frequently enter and exit in the market. Due to their modus-operandi, these funds may give higher returns however, they carry higher risks t oo. It is also true that prices fluctuate in response to available information widely as per the perceptions of the players involved and they are mostly unpredictable. Usually, it is not possible to use information to predict incoming price.Contrasting actively managed funds, passively managed funds take a long term view and do not frequently enter or exit the market. The advantage is that they are less risky and pay lesser taxes in comparison to active funds. Owing to limited number of transactions, passively managed funds go on less on transaction costs. They usually provide risk free average returns. Passively managed funds are highly diversified to minimize market risks. Another advantage is that they are not information dependent while reshuffling their portfolios, which usually happen at much lesser frequency.The only injustice that can be said against passively managed funds is that they do not provide fancy returns