Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals. Know more

Kotak e-Term

Protect your family's financial future. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and life cover. Know more

Kotak e-Invest

Insurance and Investment in one plan. Know more

Kotak Lifetime Income Plan

Retirement years are the golden years of life. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Difference Between Passive and Active Investing

In active investment, fund managers are in control and manage the fund at their discretion. In passive investment, the insurance company is in charge of everything.

  • Apr 26, 2022

There are two ways to manage your mutual fund portfolios: Actively and Passively. Mutual fund portfolio management refers to how the fund manager handles the underlying assets (equity, debt, gold, etc.). Handling the portfolio asset means the fund manager buying and selling the portfolio assets. However, it is important to understand the difference between active and passive investments to get a clearer insight into how the funds are managed. This will give you more clarity on the type of policy you would like to opt-in the future as per your financial goals.

In this article, you will learn what is active vs passive investment and how active and passive investments are different from each other. In addition, you will know which passive and active strategies are followed in investment, along with other details regarding active trading vs passive trading.

To understand the core difference between active and passive investment, you will need to understand the core functioning of active trading vs passive trading.

What is an Active Investment?

Active investing refers to the fund actively managed by the fund manager of the policy or plan you have invested in. In this type of investment, the fund manager has overall control and can manage the buying and selling of the portfolio assets and is highly involved in selecting stocks and bonds to be included in the portfolio. Basically, in active investing, the fund manager has greater control of the policy matters.

What is a Passive Investment?

Passive investing refers to the funds that the fund manager is passively managing. The fund manager has no role and is not involved in investment decisions. In this type of investment, the insurance company takes ownership of all the policy and plan matters and manages the strategies themselves.

Having understood the basic difference between passive and active strategies, you must now have a much deeper understanding of active vs. passive investment.

Active vs. Passive Investment- Advantages and disadvantages

Let’s look at the advantages and disadvantages of Active vs. Passive Investment to understand what will fit correctly into your investment goal.


Active investment

  • Flexibility: Highly flexible and gives you more control of your policy.
  • Hedging: Options of hedging the best bets using different techniques.
  • Tax management: This allows you to manage your resources and thus trim your capital gains taxes.

Passive investment

  • Low fees: Service and management fees are very low.
  • Transparency: The index fund assets are mentioned.
  • Tax-efficient: The strategy used does not result in very high capital gains.


Active investment

  • Very expensive: The service and management fund fees are high.
  • Active risk: Directly linked to market products

Passive investment

  • Too limited: Limited to low risk and specific index managed by the insurer.
  • Small returns: The returns are small as the money is invested in safe and low-risk funds.

Active vs Passive Investing: A Comparison

Active Investment

Passive Investment


Fund managers are in control and manage the fund at their discretion.

The insurance company is in charge of everything.

Expense ratio


Medium to low


Fund managers can manage high returns



Very High

Minimal to no risk

Deeper knowledge and a clear understanding of each investment type is of utmost significance to ensure proper portfolio management. With a better understanding and clarity on what active and passive investment means, you can now determine how you would want your portfolio management to take place.

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Kotak e-Invest

Download Brochure


  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521


- A Consumer Education Initiative series by Kotak Life

Similar Articles

What are the Best Investment Options for Young Adults?

वित्तीय संपत्तियां और उनके प्रकार

ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

What are the Best Investment Options for Beginners or Amateur Investors in India?

Why Should You Invest in NPS?

Why Do You Need A ULIP Plan - All You Need To Know

How to Increase Net Worth Along with Family Protection

What is SIP Calculator, and How it Works?

Long Term Savings Plan - Best Savings Investment Plans in India

Unit-Linked Life Insurance (ULIPs) vs. Term Insurance

How to Plan Your Child's Education - A Step-by-Step Guide

How to Cancel ULIP Policy?

Can You Have ULIP Plan and Health Insurance Plan Both?

Best One-Time Investment Plans in India

Why Should You Build an Emergency Fund?

Top 10 Investment Strategies to Create Wealth

Will You Need to Withdraw or Surrender Money From ULIP

What is Fund Switch in ULIP? And ULIP Fund Switching Techniques

How to Use Recurring Investment Strategies to Build Wealth?

What Is a Credit Score? Definition, Factors, and Ways to Raise It

What is Money Management? Definition & Example

Top 5 Principles That Need to be Followed for Wealth Creation

Endowment Plan vs Fixed Deposit?

Building wealth through regular investing

Can ULIP Help in Achieving Short-Term Financial Goals?

Which is a Better Investment - Mutual Funds Or ULIP?

Top 5 Investment Options in 2022 for Healthy Returns

How Much Wealth Can You Create from ULIP in 10 years?

Best Investment Options to Cover Your Child's Education

5 Reasons Why ULIP Plans are One of The Best Retirement Planning Instruments

How to Apply for Death Claim Benefits in ULIPs - Kotak Life

How To Invest Money In ULIP?

How ULIPs can help you achieve your financial goals

How Increasing Your SIP Every Year Helps You Reach Your Financial Goal Sooner?

ULIP As An Investment Option For Senior Citizens

What is Savings and the Importance of Saving Money

यूलिप और उनके प्रकार क्या हैं?

यूलिप के फायदे और नुकसान क्या हैं?

How to Plan your Investment to Achieve Periodic Financial Goals?

6 Important Tips to Maximize Your Gains with ULIP Investments

Successful Financial Planning for Urban Women

What is ULIP Plan, and How Does it Work?

Difference Between Guaranteed Savings Plan and ULIP

ULIP Capital Gain Tax: Check Tax Norms for Capital Gain on ULIPs

Understanding ULIP Risks: What are the Odds of Losing all my Money and Projected Returns?

How Can ULIPs Help You Plan for Your Child's Future?

Is This The Right Time To Invest In ULIP? Why or Why Not?

यूनिट लिंक्ड इंश्योरेंस प्लान में लॉयल्टी एडिशन कैसे काम करते हैं

What are Fixed Maturity Plans and Why Should I Invest in Them?

Importance of Portfolio Management

Develop an investing plan

How to Choose the Best ULIP Plans to Invest in 2022?

What Is Social Impact Investing and How Does It Benefit Society?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

FAQs on Taxation of ULIPs

Can I Surrender My ULIP Policy after 2 Years?

Is Life Insurance Investment Worthy Enough

Why ULIP Should Be a Part of Your Investment Portfolio?

ULIP Tax Benefits: यहां निवेश करने पर मिलते हैं 5 बड़े फायदे

Rate of Interest on Different Investment Plans in India

5 Best Long Term Investments To Add To Your Portfolio in 2023

How to Calculate Your ULIP Returns?

How Can a Legal Nominee Claim ULIP Benefits are the Policyholder’s Death?

First Job? Here are Some Tips on How to Manage Finances

What are the Maturity Benefits in a ULIP Plan: Fund Value Sum Assured or Only Fund Value?

Safe Investment Options with High Returns for FY 2018-19

ULIP Plans Riders You Should Know About

Why Are ULIPs Called Flexible Investments?

ULIP Plan or Traditional Insurance Plans - Which is better?

What are loyalty additions, and how do they work in a ULIP?

Is ULIP A Good Investment Option?

What is ULIP and Its Benefits?

Do You Know the Difference Between Savings and Investment?

Are Investment Returns Guaranteed in a ULIP?

ULIP Vs Life Insurance Plan Know the Difference

ULIP Benefits You Can Avail from Early Investing

8 Important Tips to Maximize Gains with ULIP Investments

Do ULIPs Give Good Returns On Investments?

What is the Estimated Return Percentage on ULIP? Do Investors Get Compound Interest?

Tax-Deferred Savings Plan: Overview, Benefits, Works

Planning for Your Child's Higher Education? Explore These Investment Options

5 Reasons to Buy ULIPS for a Financially Secured Future

ULIP vs FD - Which is Better and Why?

8 Charges in ULIP That You Must Know

Will AI be Your Future Financial Adviser? What Role Will Humans Play?

How and when should you exit from bad-performing ULIP?

What is Premium Redirection in ULIPs Plans | ULIP Insurance Plans | Kotak Life Insurance

How To Track ULIP Performance?

Top 11 Investment Plans Available in India

यूलिप के फायदे (Benefits of ULIP in Hindi)

How to Manage Your Portfolio Like a Professional?

Here's are the uses of ULIP your must be aware of

Is ULIP a Complex Financial Product?

Learn About Safe Investments with High Returns in India

How to Set Financial Goals for Your Future

How Is ULIP Different from Other Life Insurance Plans? Where Can I Invest - ELSS, ULIP, or PPF?

Investment Options for NRIs in India

How Do One-Time Investment Plans Work?

How to Create Short-Term and Long-Term Wealth with ULIPs - Kotak Life

How to Fix the 9 Most Common Financial Problems Your Family is Facing

ULIP NAV - Everything You Need to Know

What's Better for Your Child's Education? Child Plans or Mutual Funds?

What is ULIP Renewal?

Planning For Children's Future

What are Some of the Safest Investment Options in India?

ULIP Investment Benefits You Must Know

Savings Plan for Grandchildren

All you need to know about claiming maturity proceeds from Ulip

Is the surrender value of ULIP taxable?

What is Compound Interest, And How Do I Calculate it?

Best Investment Plans for Children - Secure Your Child's Future

How to Save Money from Salary?

Corporate Bonds: Meaning, Types & Benefits

Are Money Back Policies Helpful? A Complete Guide

Benefits of ULIP as a Child Insurance Plan

Which is Better – FD, Mutual Fund, SIP, or ULIP?

The lesser-known facts about ULIP policy that customers should be aware of?

Got a Salary Hike? Here’s How to Plan your investment further

What are the Best Investment Options For Females?

Creating a second source of income with life insurance

How Can ELSS Funds Help You Save Tax & Create Wealth?

Customising investments to manage your wealth

Factors Affecting Share Prices In The Stock Market

What is a Savings Plan and What are is Benefits?

What is NAV in ULIP, and How is it calculated?

ULIP Frequently Asked Questions (FAQ) - Kotak Life

Are Gains from ULIP Sale Taxable?

Which are the Best ULIP Plans in India for Children?

What are the Best Investment Options for Students in India?

4 Rules To Keep In Mind To Secure Your Child’s Future Financially

How to Make Your Financial Portfolio?

What are the Advantages and Disadvantages of ULIP?

What is Partial Withdrawal in ULIPs?

What are the things to consider before buying ULIPs?

How to Start Saving Money in 10 Simple Ways?

Why Should I Invest in ULIP?

What is Mutual Funds? | How Mutual Funds Work, Definition

Four Financial Lessons from The Vedas on Living Life to The Fullest

Why are ULIPs One of the Best Tax Saving Instruments?

Beginner's Guide to Wealth Creation: Meaning, Strategies, & Importance

Asset Allocations in ULIP - Know the Top Benefits

यूलिप में 8 शुल्क जो आपको अवश्य जानना चाहिए

Different Types of ULIP Investments in India

Balancing Investment Between Risk and Return on Investments

Early Investing and the Power of Compounding

How to Build a Strong Financial Foundation For the Future?

Learn About Safe Investments with High Returns in India

Planning Financial Goals and Objectives of Financial Planning

What are the Minimum and Maximum Investments in ULIP?

ULIP Plan as a Gift

How Much Wealth Can You Create From ULIP in 10 years?

How is the Compound Annual Growth Rate (CAGR) Calculated in ULIP?

What is Equity Mutual Funds: Meaning, Types & Benefits

What is a Child Money Back Plan, and How Does it Work?

Best Investment Plans For You To Invest In 2023

Know How to Invest at Every Age for Larger Returns

Planning For Son or Daughter's Wedding

ULIP Withdrawal Conditions - Before and After 5 years

How has ULIP Grown Over the Last 3 years?

Single Premium ULIP or a PPF - Which One is Better?

What Is Financial Planning?

What is Fund Value in ULIP?

What are Financial Assets & their types?

Why ULIP is Better Investment for Long-Term Wealth Creation?

यूलिप प्लान में परिपक्वता लाभ क्या हैं: फंड वैल्यू सम एश्योर्ड या ओनली फंड वैल्यू?

What is Direct Investment and its Types?

What is a Bond Fund and How It Works?

Investments Options to Buy a house in India

Know Why You Should Stay Invested in Your ULIP Plan

Here's Why it's a Good Time to Explore ULIPs as an Investment

Difference Between Linked and Non-Linked Insurance Plans

Here's Myths on Investments in ULIP Plans

All you need to know about Fund Switching in ULIPs

How Can ULIP Plan be as an Investment for Your Child

Does Rupee Cost Averaging Work In Unit-Linked Insurance Plans?

ULIPs Investment – A Boon or Bane?

What are Index Funds, and How Do They Work?

What are ULIPs and their Types?

ULIP policy: What happens when you stop paying ULIP policy premium during lock-in period

ULIPs: Suitable for all

What is the Time Value of Money (TVM)?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

What Happens If I Stop Paying My ULIP Policy Premium After Paying the First Premium? Will I Still Get The Return?

What are the Best Short-Term Investment Plans with High Returns?

Can ULIP Policy be Transferred?

Here's Whether You Should Link ULIP Plan with your Term Insurance

Can You Invest in Both Term Insurance and ULIP?

Best Investment Options in India in 2022

5 Reasons to Have a Child Education Plan

Difference Between ULIP and Endowment Plan?

Can NRIs Invest in ULIP Plans Offered in India?

How to Manage Inheritance Money?

Receiving regular payouts at various stages of life

What is Lock-In Period in ULIPs?

Top ULIP Myths That You Must Stop Believing In

How Safe is it to Invest in ULIP plans?

Why is Portfolio Diversification Important? How to Diversify Your Portfolio?