AM vs RM Which Is a Smarter Choice?

AM (active management) and RM (passive management) are two distinct investment strategies used by investors to manage their portfolios in the stock market. AM involves selecting and trading stocks actively to outperform the market, while RM involves tracking a specific index and holding the same stocks as the index to match its performance. Both strategies have their own advantages and disadvantages, and investors must carefully consider their goals and risk tolerance before choosing one over the other.

AM or RM?

When comparing AM and RM, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between AM and RM.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. AM has a dividend yield of -%, while RM has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. AM reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, RM reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with AM P/E ratio at -1.91 and RM's P/E ratio at -1.79. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. AM P/B ratio is 0.22 while RM's P/B ratio is 6.88.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, AM has seen a 5-year revenue growth of 0.00%, while RM's is -0.13%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with AM's ROE at -11.30% and RM's ROE at -311.10%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are HK$0.05 for AM and £98.00 for RM. Over the past year, AM's prices ranged from HK$0.04 to HK$0.10, with a yearly change of 134.09%. RM's prices fluctuated between £51.00 and £106.00, with a yearly change of 107.84%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.