An investor who takes a passive role in the management of the company in which he has a large stake (usually in the form of shares) thanks to the investor’s satisfaction with the ongoing performance of management. A passive investor has neither the time nor the ability to manage his own portfolio. Therefore, an actively managed investment company may particularly appeal to such an investor. Management fees may not be as much of an issue for passive investors who don’t mind paying higher fees for a manager who is applying an investment approach that suits their needs.

A passive investor is also known as a hands-off investor.