Compete Question: Passive portfolio management calls for holding diversified portfolios without spending effort or resources attempting to improve investment performance through security analysis.
Explanation: Passive portfolio management or Index fund management is an investment strategy that copies an index such as the FTSE 100 index by holding some stocks and securities of the index. Equal weighting is given to every security and stock without spending effort or resources attempting to improve investment performance through security analysis.
This is in contrast with the Active Portfolio Management strategy which aims to surpass the performance of any given index. This type of portfolio is actively monitored by a dedicated manager who continuously researches way to improve investment performance through security analysis.
Unlimited liability-this is by far the greatest disadvantage to the proprietorship. Even though proprietors may invest only part of their capital in the business, they remain personally liable to the full extent of their assets for the liabilities of the business.
