Article Abstract

Identifying equity funds likely to outperform remains a daunting task for capital allocators. Traditional portfolio analyses provide useful insights into how a fund is being managed while offering little clarity on the potential for ongoing success. Active share and position count were introduced as metrics that identify funds that will generate excess returns via skilled management. This paper argues that these metrics provide no information regarding future fund performance or manager skill. It is further proposed that active share and position count do more to relieve unconscious anxiety provoked during the allocation process rather than enhance rigorous judgment.

Three Key Takeaways: