Active Share: Active Share is one-half of the sum of the absolute values of differences between the benchmark and portfolio for all positions, expressed as an integer between 0 and 100. Zero Active Share represents a portfolio identical to the benchmark, while an Active Share of 100 indicates that the portfolio and benchmark have no positions in common. The measure is calculated at a point in time, likely on quarter-end positions, and is often presented as a three-year moving average.
Where wfund,i and windex,i are the portfolio weights of asset i in the fund and in the index, and the sum is taken over the universe of all assets.
Investors who are required to select and monitor investment managers should develop a basic understanding of investment statistics. Quantitative tools can provide you with good insight that you can use in your qualitative interviews with managers and when monitoring your investments.