An portfolio strategy in which a investor or investment manager constructs a widely diversified portfolio of securities that mimics, closely or up to a certain point, the performance of a broad-based market index. Nevertheless, the strategy’s performance is claimed be the result of active management (alpha component of return) based on market expertise.
Investors or managers use the portfolio’s resources to buy stocks that make up the bulk of a standard stock market index. The rest of resources are invested in other stocks.
