This takes us into the realm of ‘active share’.
A newfound lust among fund managers to prove they are not closet huggers has spawned data purporting to show how much of a portfolio represents an index and how much is the fruits of their skilful labour.
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This is nonsense. It makes it seem as if owning the good stuff in an index is a bad thing to do. But the financial world has never been shy of inventing new and nonsensical data.
Jim Wood-Smith is head of research at Hawksmoor Investment Management
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