question: global performance evaluation

I am very confused on Schweser notes P. 236-237. Please help!! The original text reads: "In stead of selecting global markets and then deciding whether to passively invest in indices or actively invest by selecting securities, we could have assumed the manager’s performance will be measured against a global index. In that case the manager has the choice of passively investing in the global index or attempting to outperform the index by alternig the portfolio allocation relative to the index. " What’s the difference between the two approaches? It seems to me they are the same: passively invest in indices, or alternatively, select securities. Somebody help please! Thanks.

wouldn’t lose any sleep trying to figure out what schweser says. Don’t touch it myself. What does the actual CFA text say about it? It’s probably much clearer. Sounds like: choice A = global direct stock picking to try to beat the global index - ie buy GE, Nokia, Toyota, Shell, etc, etc. choice B = using different country and/or industry sector weightings to try to beat the global index - eg over/under-weight various passive ETFs like IVV (for the US), EFEA (for non-US developed markets, EEM (for emerging markets ETF), etc. You’re using passive index funds but tactically altering allocations/weights.

Thanks, null&nuller, that helps.