Explain 'passive management' in investing.

Passive management in investing refers to an investment strategy that involves minimal buying and selling of securities, primarily aiming to replicate the performance of a specific market index rather than trying to outperform it. This is typically achieved through vehicles like index funds and exchange-traded funds (ETFs) that are designed to mirror the performance of a particular index.

Investors using passive management believe that markets are generally efficient, meaning that it is challenging to consistently achieve higher returns than the market average through active trading. They accept market returns rather than trying to beat the market, which helps to keep costs lower due to reduced transaction fees and lower management expenses associated with less frequent trading.

This approach often results in a more stable investment strategy that can lead to long-term growth with reduced volatility, making it appealing for many investors, particularly those looking to hold their investments over a longer period while minimizing portfolio turnover.