Going Active? Then Get REALLY Active!
You decide that this is the year you are going to get in shape. You hire a personal trainer but after a few workouts, you realize he is just repeating the same workouts that you have on your P90X® DVDs! Feel like you aren’t getting what you paid for?
Something similar can happen with active managers. You decide that you want to try to outperform the index, so you hire an active manager. After a few years, your results hover extremely close to the index. After more investigation, you discover that your actively managed fund has a very high degree of similarity to the index. You are angry because you are paying for a manager’s expertise while they are really indexing.
So how do you avoid this? By finding a manager with high active share.
Click here to download our white paper on active portfolio management.