What are the main management styles with regard to the benchmark?

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The term benchmark means a “standard of comparison”. But this standard also defines the most important management styles in the area of fund administration. Here are the most important:

  • Active fund management: This is characterised by a selection of securitiess and a time zone arbitrage, which are designed to achieve a higher return than the benchmark.
  • Passive fund management: the aim of this approach is to replicate the composition of the benchmark selected as a benchmark.
  • Mixed fund management: the portfolio is divided into two parts, with active management applied to one part and passive management applied to the other. With the same remaining term and yield-to-maturity, the duration is shortened with higher coupons.

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