Which of the following strategies focuses on reducing risks rather than outperforming the market?

The strategy that focuses on reducing risks rather than outperforming the market is passive investment strategies. Passive investing typically involves tracking a market index or a segment of the market to achieve returns that are in line with that particular benchmark. The primary goal is not to outperform the market but rather to minimize risks associated with active management, such as higher fees and the potential for poor timing in investment decisions.

Passive strategies, such as index funds or exchange-traded funds (ETFs), aim to provide broad market exposure and often have lower volatility compared to actively managed strategies. They tend to have lower investment management costs, and since they are less reactive to market changes, they avoid the risks associated with frequent trading and speculative investment decisions. By doing so, they help preserve capital and manage specific risks more effectively.

While other strategies like risk management are also focused on reducing risks, they usually encompass a broader framework that may include both active and passive approaches, making them less specific to passive investment strategies alone.