One of the first questions many investors ask is: should I try to beat the market, or simply track it? This is the difference between active and passive investing.
What is passive investing?
Passive investing is about tracking the market, not trying to outsmart it. You invest in funds (like ETFs) that aim to match the performance of an index, such as the FTSE 100 or S&P 500.
It’s a long-term, low-cost approach that doesn’t rely on picking winners or reacting to market swings.
What is active investing?
Active investing means trying to beat the market, often by picking individual shares or timing when to buy and sell. Active fund managers charge higher fees for their research and decision-making, but they don’t always outperform the market.
Some investors enjoy being more hands-on, but this style can be riskier, more time-consuming, and more expensive.
Why we focus on passive
At InvestEngine, we believe simplicity and low costs win in the long run. That’s why we use low-cost ETFs in all our Managed portfolios.
- Lower fees mean more of your money stays invested
- Diversification helps spread risk across many investments
- Evidence-backed strategy: Over time, passive investing has often outperformed more expensive active funds
Is passive investing right for me?
If you're looking for a simple, low-maintenance approach that gives you access to global markets, passive investing may be a great fit.
It also aligns well with a long-term investment strategy, see our article on How long should I invest for? to understand why time in the market matters more than timing the market.
Want to get started?
Explore our full range of ETFs or read about Tax-Free Investing to learn how ISAs and SIPPs can help you keep more of what you earn.