However, you would lose the benefit of active portfolio management from some top money managers.

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Active portfolio management also requires more trading and so the higher fees also help account for this.

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But sooner or later the luck will run out, and shareholders will be left with the performance drag that comes from active portfolio management.

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Active portfolio management can hurt you in three ways.

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So these managers eschew the passive approach to tracking an index in favor of a semi-active approach to portfolio management.

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In a similar fashion, you can create a broadly diversified portfolio but choose an active management strategy instead of simply buying and holding to track the major indexes (which is passive management).

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Style investing is an active management strategy whereby an investor overweighs their portfolio to growth or value stocks in an attempt to outperform the broad market.

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Since a portfolio consists of multiple mutual funds, a portfolio of actively managed funds should be benchmarked to a portfolio of comparable index funds to determine if active fund management is working or hurting.

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In a taxable portfolio holding dozens of funds or securities, overly active tax management can get sloppy and expensive.

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