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Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differ from the benchmark index. The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general You cannot invest directly in an index.
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Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than their original cost. Performance data current to the most recent month end may be obtained by calling 1-800-331-8936. The funds impose a 2% redemption fee for shares held less than 90 days. Performance data quoted does not reflect the redemption fee. If reflected, total return would be reduced.
Diversification does not assure a profit or protect against a loss in a declining market.
To get a snapshot of funds with high and low active share, Barron’s asked Morningstar to match active diversified U.S. equity funds against the iShares exchange-traded fund most closely correlated with its Morningstar category. While there is the possibility of tracking error, it’s a fitting comparison because the alternative to buying these active funds would likely be an ETF.
We also cross-referenced this data with Cremers and Petajisto’s results for each fund’s self-declared and minimum benchmarks.
Barron’s then eliminated funds with less than $200 million in assets, screened out alternative strategies, and ditched funds of funds, though it’s worth noting that investors should question the wisdom of paying for a fund of funds when the result is essentially an index.
