Your Company,Solid State Gizmo,Inc

Essay

Your company,Solid State Gizmo,Inc.(SSG)has just been spun off by its parent firm,Octopus Industries,into a separate firm.SSG's pension fund,currently amounting to $250 million of assets,has also been spun off.SSG's board of directors has asked you to study proposals from a number of investment management firms,each offering to manage the pension fund.You are to give the board a report discussing the different styles of management that are available and making recommendations about which firms should be seriously considered and how SSG should instruct them to manage the pension fund if they are hired.Carefully describe the following:
a. What is "passive" investment management? What kinds of things does a passive manager do?
b. What factors would you look at to judge if one passive manager is better than another?
c. If passive management is chosen, what instructions might you want to give the fund manager to tailor the optimal passive strategy for SSG's pension fund?
d. What is "active" investment management? What kinds of things does an active manager do?
e. How would you judge if one active manager is better than another?
f. If active management is chosen, what instructions might you want to give the fund manager?