In portfolio management terms, what does ‘Execution’ mean and why is it important?
A. Execution is when the rulers of a country are replaced by a new group and this has a strong tendency to affect portfolio returns in that country.
B. Execution refers to the process of applying skills, knowledge, and tools in order to manage efficient buying and selling of portfolio investments with a primary goal to reduce and minimize transaction costs.
C. Execution refers to the process of applying skills, knowledge, and tools in order to manage efficient buying and selling of portfolio investments although reducing and/or minimizing transaction costs is not important for Passive Investors but is only important to Active Investors since they are trying to beat the index or benchmark (e.g. total market returns).