Does Active Share Matter?

Morningstar analysts have looked at active share from a UK perspective

Samuel Meakin 30 September, 2021 | 12:17AM
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pound symbols in blister pack

Active share is a measure of the difference between a portfolio and a benchmark. It’s an important concept for investors wishing to judge how fund managers’ portfolios deviate from the index, and how that affects performance. It can show clearly when a fund is a "closet index tracker", one that holds shares very similar to the index but charges fees associated with active management. (The higher the active share, the more the fund differs from the benchmark).

Here, we take a look at the results of our recent active share study, Context Is Everything When Using Active Share (authored by William Chow, Mathieu Caquineau, and Matias Mottola), through a UK equity lens. That report is a comprehensive global study of 43 Morningstar categories across developed and emerging markets.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Samuel Meakin  is a fund analyst for Morningstar