In a move to enhance transparency and disclosure to clients, Threadneedle’s latest professional investor factsheets, to be published this week, include each fund’s active share, a measure of how much the fund’s holdings deviate from its underlying benchmark. A portfolio with no holdings in common with its benchmark would have an active share of 100%.
Campbell Fleming, chief executive of Threadneedle Investments, explains the move “is about transparency and accountability. As managers we have a duty to demonstrate the value we deliver by providing information that enables investors to evaluate, monitor and assess fund manager performance. Used in conjunction with other data, active share is another measure for investors to assess whether they are getting what they expect from a manager."
Threadneedle will report the active share on over 30 of its equity funds as at 31 December 2014. The majority of these show an active share above 70%. For private investors, the active share of available funds will be added to Threadneedle’s website along with investor information to support the use of this metric, as it is a relatively new measure for UK investors.