Need to help clients understand active share? Try these tips.
Tell a client that before he or she buys an actively managed fund, you’ll sit down with her and calculate its active share. Then, compare the various fund options being considered with this metric in mind.
Be sure to point out that these calculations are complex, time-consuming, and must be done manually, since fund-specific data isn’t readily available to the public.
Explain the reason you’re willing to go to the effort of making these calculations is that they can be a real eye opener. Your attention to due diligence will be noticed.