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Passive investment is associated with funds that simply try and track the performance of a specific market or index, e.g. the FTSE 100. Compared to active investment, passive investment is different because a computer will aim to merely replicate the performance of a market or index by buying all or the majority of assets in the respective sector.

This comes with the main of advantage of a tracker fund (a type of passive investment) having less charges associated with it as there is no dedicated fund manager and associated research team constantly looking to cherry-pick the best assets.

Two of the most popular type of passive investment funds are tracker funds and exchange traded funds.