Active, Passive or Both: 7 Questions to Help You Decide

Just how much you allocate your portfolios towards active or passive funds depends on your personal characteristics. Answer these seven questions to help decide

Christine Benz 18 June, 2015 | 2:07PM
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All this week we are running a Guide to Active and Passive Investing to help you, the investor, make smart choices for your portfolio.

Morningstar's analyst team has long held the view that investors can assemble successful portfolios composed exclusively of index funds, entirely of actively managed funds, or a combination of the two. Just how much they allocate their portfolios in one direction or another depends on their personal characteristics: the type of account they're investing in, how many holdings they'd like to maintain, and how much ongoing management of their portfolios, among other factors. 

As you think through your own portfolio's allocations to active and passive management, and I would put individual-stock investments under the "active management" umbrella, ask yourself the following questions:

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Christine Benz

Christine Benz  is director of personal finance at Morningstar and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances.