Since most fund selectors care about active share, it is of little surprise they want managers to be transparent about it too, for example by publishing it on their monthly factsheets. Some asset managers indeed do this consistently, such as Skagen, the Norwegian boutique equity fund manager. “We first started reporting active share in 2012, and publish it for all our funds it in our monthly factsheets,” says Midhat Syed, a portfolio analyst at Skagen. “Typically, where we present active share, we also present tracking error, both of which are commonly used and complementary measures of activeness within the industry.”
Despite active share being a popular concept with investors, few asset managers have followed in Skagen’s footsteps. Indeed, Neptune IM and Woodford IM are the only other major fund houses who spring to mind when it comes to making their funds’ active share publicly available.
This reluctance has drawn criticism not only from fund buyers, but also from investment research firms such as Morningstar. “Fund managers could be a lot more transparent about active share, since they all have information related to it readily available. Especially for individual investors it is difficult to get information about active share,” says Jeffrey Schumacher, a manager research analyst at Morningstar.
But even though fund managers tend to reveal their active share to clients when they ask for it, and use it in client presentations to boast about how active they are, many fund selectors would like fund managers to be more open about it. An often-heard complaint is that the active share figures published by fund managers are just snapshots, that don’t say much about how active a manager is in the longer term.
