What is ‘Hands-Off Investor’
An investor who prefers to set an investment portfolio and make only minor changes for a long period of time. Many hands-off investors use index funds or target date funds which make only small and slow changes to their holdings, and therefore do not require much monitoring.
Explaining ‘Hands-Off Investor’
A hands-off investment strategy is well-suited to many retail investors who may not have the time needed to routinely monitor and research their investments. Hands-on, active management requires investors to continuously keep up-to-date on the positions that they hold. This often requires several hours of research per week. Active managers believe that by doing this work, they can earn higher-than-average returns on their investments.
A hands-off strategy is not necessarily underperforming. Many investors believe in an indexing approach, which posits that sticking with a well-diversified portfolio over the long term is the key to wealth. Since index funds often have very low expense ratios, hands-off investors often enjoy a built-in advantage over active traders who pay more in trading commissions, lose out to the bid-ask spread and incur the higher tax rates on short-term capital gains and nonqualified dividends.
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- Hands off hedge funds – heinonline.org [PDF]
- Hands off my brand! The financial consequences of protecting brands through trademark infringement lawsuits – journals.sagepub.com [PDF]
- Hotels to OTAs:“Hands off my rates!” The economic consequences of the rate parity legislative actions in Europe and the US – www.sciencedirect.com [PDF]
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