Majedie: Nine arguments against a focus on active share

Rob Harris, CEO of Majedie Asset Management, discusses why he believes an increased focus on funds' 'active share' is misguided.

We have been struck recently by the sharply rising article count on ‘Active Share' (AS), a measure of the percentage of stock holdings in a manager's portfolio that differ from the benchmark index. In simple terms, a growing number of commentators would have you believe that the higher AS, the better. Conversely, investing in large companies that are almost inevitably major index constituents is deemed to be poor fund management. We believe that AS has its uses as an investigative tool but, used in isolation, is a crude way to screen funds. According to the Centre for Policy Studie...