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ETF-INVESTMENT

Investment strategies you should know

Passive Investing

Investors try to replicate a benchmark like an index. And to keep management costs low by intervening as little as possible.

Passive investments are mainly made through ETFs, but can also occur when you buy a stock and simply hold it for the long term.

Active investing

Investors try to outperform a benchmark like an index and take full advantage of short-term price fluctuations by actively buying and selling securities.

It requires much deeper analysis and expertise to know when to swing into or out of a particular stock, bond or asset.

Also still known as stock picking.

Long-Short Strategy

Investors try to bet on rising and falling prices at the same time. In doing so, the hoped-for long-term positive development should be hedged by short positions even in the event of negative developments. Hedge funds are known to be used for such high-risk strategies.

Multi-asset strategy

A multi-asset strategy is an investment strategy that includes several different forms of investment such as stocks, bonds and commodities. This is intended to spread risk and profit opportunities more broadly.

Core-satellite strategy

Investors focus on various broadly diversified core investments (Core), which should offer a return with sufficient security, and on several individual investments (Satellites) with higher risk return potential, which are attached to increase the return. These individual investments should each represent only a small proportion of the overall portfolio.

Growth Investing

Investors are focusing on shares of companies and equity funds where earnings are rising sharply and further growth is expected.

Value Investing

Investors buy shares that they believe have a market value below their estimated true value.  The investor can benefit by buying these securities and then selling them when they have reached their estimated true value.

Factor-based investing

Factor Investing is actually very close to passive investing in that you don't try to actively beat the market. The difference is that in Factor Investing the individual securities are not only weighted according to their market capitalization, but other factors are also taken into account, e.g. political risk of a company or momentum.