High active share does not equal high alpha.
A high active share does not guarantee a superior performance of a fund on a truly risk - adjusted basis, as clearly demonstrated by this Alpholio ™ analysis.
This is an example of a strategy whose
high active share does not necessarily result in a significant risk - adjusted outperformance.
Funds with
high active share do seem to create alpha.
Not exact matches
In his view,
high active share means concentrated portfolios that can have
high over-performance or
high under - performance, but it
does not reliably predict which.
Bottom line: if you don't buy an index, you'll want to focus on strategies that have unique holdings and
high active share.