EXCHANGE TRADED FUNDS (ETFs) Table of Contents CHAPTER 1 Understanding Investment Strategies {text:bookmark-start} It's easy to get caught up in the hype about which investment approach is better. Proponents of each believe their approach is the right one, the one that has the potential to generate the greatest amount of return over the long term. {text:bookmark-end} The strategies used by investors can be classified into two broad categories: ACTIVE MANAGEMENT Active management might best be described as an attempt to "beat" the market as measured by a particular benchmark or index by applying human intelligence to find "good deals" in the financial markets. Active management is the predominant model for investment strategy today. Active managers try to pick attractive stocks, bonds, mutual funds, time when to move into or out of markets or market sectors, and place leveraged bets on the future direction of securities and markets with options, futures, and other derivatives. Their objective is to make a profit, and, often without intention, to do better than they would have done if they simply accepted average market returns. In pursuing their objectives, active managers search out information they believe to be valuable, and often develop complex or proprietary selection and trading systems. Active management encompasses hundreds of methods, and includes fundamental analysis, technical analysis, and macroeconomic analysis, all having in common an attempt to determine profitable future investment trends. Advantages: Expert analysis — Money managers make informed decisions based on experience, judgement, and prevailing market trends. & ...