ACTIVE AND PASSIVE STRATIFIES OF INVESTMENT

1. PRESENTED BY
 SAMI UR RAHMAN
 IHSAN ULLAH
 MUDASSIR
 SAYAF
MBA 7th
ABDUL WALI KHAN UNIVERSITY
MARDAN

2. INVESTMENT AND PORTFOLIO
MANAGEMENT
Lesson no# 22
Common stock: Analysis and Strategy

3. PASSIVE STRATEGY
 Some investor use passive strategy to own and to
Manage the portfolio or common stock
 A strategy involving limited ongoing buying and
selling actions.
 Passive investors will purchase investments with
the intention of long-term appreciation and limited
maintenance
 They don’t seek to out perform the market, but
simply to do like market doing
 It is useful in the efficient market

4. CONTI..
 Investor doesn’t buy and sell the securities
rapidly to get benefit from short term price
fluctuation
 Passive investors instead rely on their belief that
in the long term the investment will be profitable.
 passive investing requires good initial research,
patience and a well diversified portfolio.
 Buy-and-Hold strategy is a passive strategy

5. BUY-AND-HOLD STRATEGY
 It mean that investor simply buy a stock and hold it
till future to meet some objectives
 Investor aims to avoid repetition of transaction
costs, additional search costs etc
 If a security is satisfactory, they keep them,
otherwise they sold or replace with other securities
(incur transaction costs)
 It is applicable for all type of small and large
portfolios

6. INDEX FUNDS
 Investing in an index fund is a form of passive
investing
 They are often called benchmarks and
reconstructed on regular basis by committee
(mostly six months)
 It is effective and inexpensive way to invest
 Index funds are mutual funds that are
designed to track the performance of a
particular index.
 An index fund is an investment fund that
attempts to replicate the performance of a
given index of stocks or some other

7. CONTI..
 when the index decreases in value,
the fund's shares decrease as well, and vice
versa
 It keep the same portion of securities in their
portfolio like actual index
 e.g. Trust 500

8. ACTIVE STRATEGY
 It’s continues and ongoing process of buying
and selling of securities
 The investor assume that the rapid buying and
selling of securities are beneficial than cost
and they trade fast, rather to hold it
 It take benefit form small fluctuation of change
in prices in the stocks
 Investor continually monitor their portfolio, and
highly involved
 Will see their prices many times a day
 Focus on short term profit

9. SECTOR ROTATION
 It is an active strategy that is similar to stock
selection in a group
 It involves shifting sector weights in the
portfolio in order to take advantage of those
sectors that are expected to perform well
 The shifting helps investor to avoid those
sectors, that may be worse in near future
 Investor will check larger groups of stocks

10. CONTI..
 Investor divide stocks in four groups
 Cyclical stocks
 Interest sensitive stocks
 Defensive stocks
 Consumer goods durable stocks
 The shifting depends on the current market
condition
 Each sector reacts differently to the moment
in the economy

11. Question and Answer
THANK YOU