Active share on the JSE

Abstract

Fund managers earn a portion of their fees by out-performing a benchmark, typically an index. To out-perform, they may leverage the fund or engage in scrip lending, but usually they “stock-pick“, taking positions in the market which differ from those of the benchmark, namely: “active share”. Several factors in the fund's mandate may constrain the level of active share in a fund, inter-alia: limits on specific equities or sectors, tracking error constraints around the benchmark or limits on short-selling.