What counts as a high active share?

There is no absolute cutoff, but academic research has found that funds with active share above 80 percent have historically outperformed their benchmark more often than funds below 60 percent. Below 60 percent is usually treated as a warning sign of closet indexing.

Can active share be too high?

Not in itself, but a very high active share without a clear, repeatable process behind the choices is no quality mark on its own. It shows the portfolio deviates, not that the deviation is well thought through.

Does active share differ from tracking error?

Yes. Active share measures the portfolio's composition at a given point in time, a snapshot of the holdings. Tracking error measures how much the fund's return has historically swung relative to the index over time. A fund can have high active share but low tracking error if the deviating holdings still moved in step with the index.

Glossary

Active share

A measure of how much a fund's holdings actually differ from its benchmark index, expressed as a percentage.

What it is

The deviation from the index, in percent

Active share measures how much of a fund's portfolio does not overlap with its benchmark index. 100 percent means no overlap at all, a portfolio entirely unlike the index. 0 percent means the fund is identical to the index, position for position. The measure captures something P/E ratios and return figures do not: whether an actively managed fund actually invests actively, or simply holds an index-hugging portfolio at a higher fee.

High active share: The portfolio genuinely deviates from the index. A precondition for performing differently over time, though no guarantee that the deviation works out for the better.
Low active share: The portfolio resembles its index despite active management and an active fee, sometimes called closet indexing. A sign the fee may not be justified.
Active share does not measure quality: The measure says nothing about which deviating choices the manager made, only how large they are. A high active share built on poorly chosen companies is still a poor outcome.

In practice

What the figure is useful for asking

Active share is a useful tool for asking an actively managed fund a simple question: am I paying for active management, or for an expensive copy of the index? The measure says nothing about the outcome of the active choices, only that they exist. A fund can have high active share and still underperform the index if the deviating choices happen to be wrong. Active share should therefore always be read alongside actual returns and the process behind the choices, never on its own.

Amos Value's active share

93%

As of 31 August 2026

Common questions about active share

Related concepts

Glossary

Margin of safety

The difference between a company's intrinsic value and its market price. The foundation of thinking about risk and asymmetric return.

Fair value

An estimate of what a stock is actually worth. Not what the market believes today, but what the company is worth based on its fundamentals.

GARP

Growth at a Reasonable Price. The strategy that refuses to choose between growth and value, seeking the best of both.

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