Active share
InvestingDefinition
A measure of how different an active fund's holdings are from its benchmark, expressed as a percentage. 0% = identical to index; 100% = no overlap.
Studies (Cremers + Petajisto 2009) found high-active-share managers historically delivered alpha; low-active-share "closet indexers" did not but charged active fees. Currently being challenged as a useful sole alpha predictor.
Studies (Cremers + Petajisto 2009) found high-active-share managers historically delivered alpha; low-active-share "closet indexers" did not but charged active fees. Currently being challenged as a useful sole alpha predictor.