Active VS. Passive Investing

Word limit: 1500 words

You are required to write an essay discussing discuss the advantages and disadvantages of both

active and passive investment. You will need to justify which investment approach you would

advise your client to invest their money in.

Your essay should address the following points:

1. Define active and passive investing

2. Present the evidence for active investing (against passive investing)

3. Present the evidence for passive investing (against active investing)

4. Your essay should conclude by providing your own opinion about whether you

believe investors should invest actively or passively, based on the evidence presented.

Other information

• The majority of the marks will come from points 2 and 3.

• Marks will be awarded for the depth of discussion, as well as the clarity and structure

of your essay.

• Your essay should include both academic AND non-academic references.

• Your essay can discuss any asset class (i.e. equity, fixed income, etc).

There are many finance journals that you can reference. To help you identify relevant articles

the following journals are of higher quality and are likely to be most relevant:

• Journal of Finance

• Journal of Financial Economics

• Review of Financial Studies

• Journal of Financial and Quantitative Analysis

• Financial Analysts Journal

• Journal of Portfolio Management

You can refer to articles from other journals too. I am just using the above journals as a guide.

In addition to published articles, you can also refer to unpublished working papers. You will

find a large number of relevant papers are unpublished working papers. There is no minimum

number of articles but you should present a rigorous and detailed survey of the literature in

your essay.

The best approach to surveying the academic literature is to use Google Scholar

(https://scholar.google.com.au/). You can click (or tap) on ‘Settings’ and you should find a link

on the left hand side labelled ‘Library links’. After clicking (or tapping) on this link you can

search for the University of Sydney Library. Check the box for ‘University of Sydney Library

– @ University of Sydney’ and click (or tap) save. Now when you search in Google Scholar

you’ll be able to log in directly to the University of Sydney Library to access the article. This

is really useful if you are off-campus.

Please use 12pt font with 2cm margins and include all references in a bibliography.