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Asset management 

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Recently, I read a book by Charles D. Ellis called Figuring It Out. This book is mainly a compilation of his best essays to investors over the last 60 years. He has been around for along time in the asset management business, advising many organizations from Yale to Vanguard. In my mind, he is the asset management business equivalent of Warren Buffett. He not only is well respected, but also, he can explain the history of the business going back many decades. After all, he lived through it.  

Active management is when a manager doesn’t look anything like his or her benchmark (index/market) and is trying to outperform the benchmark. Some active managers would even say they are trying to achieve a market-like or better than market-like return with less risk. Typically, this type of management style comes with an elevated cost. Passive management is essentially the index/market.