Introduction to Financial Markets (405) — CBSE Class 10 board question

Active Fund Management refers to a style of investment where the fund manager makes all investment decisions — deciding which company, instrument, or asset class to invest in — based on research, analysis, and market news. The fund actively buys and sells securities as market perceptions change.

Two investment styles used in active fund management:

1. Growth Investing: The fund manager identifies companies expected to give above-average earnings growth, anticipating higher stock prices in the future.

1. Value Investing: The fund manager buys companies believed to be currently undervalued in the market, expecting their true worth to be recognised eventually.

Source: Chapter 7 — What is Active Fund Management?

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• This is likely a 3-mark question, so two points + a definition is sufficient.
• Always name and explain both investment styles (Growth and Value) — examiners expect this.
• Avoid confusing active management with passive (index) management; the key differentiator is fund manager discretion.