Definition ∞ A Passive Strategy in investment involves minimizing trading activity to replicate the performance of a specific market index or asset class. This approach typically entails holding a diversified portfolio of assets for extended periods, rather than actively attempting to outperform the market through frequent buying and selling. It aims to achieve market returns with lower transaction costs and reduced management fees. Index funds and exchange-traded funds often employ this method.
Context ∞ The adoption of Passive Strategy is growing in the digital asset sector, particularly with the rise of crypto index funds and tokenized portfolios. News reports often discuss the benefits of such strategies for long-term investors seeking broad market exposure without active management. The debate centers on whether the volatile nature of cryptocurrencies makes a purely passive approach viable or if some active adjustments are still necessary.
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