Active Share

What is a Active Share?

 Active Shares are those in which there are frequent and day to day dealings. However, some market analysts and investment pundits define active shares as those which are purchased and sold at least thrice a week.

Active Share is a reliable measure of stock holding’s percentage in the portfolio of a manager that tend to differ from the benchmark index.

That definition, needless to say, is pretty much self evident of the fact that these shares are pretty easy to purchase and sell. Shares of almost all leading companies across the world are usually active – primarily because the market standing of these companies are prone to sensitive economic and political events and therefore the value of their shares often undergoes frequent fluctuations.

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Understanding what Active Share is can be invaluable to your investment decisions when it comes to mutual funds. This is possible because in essence, Active Share is a method that can be used to evaluate how actively a portfolio can be managed. Alternatively, one can also say that the core concept behind these shares eventually determines how different a mutual funds holdings stand from the index that it is being compared to.

In Other Words Active Share – Share in which there are frequent and day-to-day dealings, as distinguished from partly active shares in which dealings are not so frequent. Most shares of leading companies would be active, particularly those which are sensitive to economic and political events and are, therefore, subject to sudden price movements. Some market analysts would define active shares as those which are bought and sold at least three times a week. Easy to buy or sell

 Edited and Updated 2nd January 2014

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