(Daily Alts) There are two things investment managers need to have in order to consistently generate alpha: The first is skill, and the second is active exposures. And while the former is harder to come by than the latter, it’s active exposures – or “active share” – that matter most, since no amount of skill can compensate for a portfolio that’s exactly the same as its benchmark. How can a manager beat the market if her portfolio is the market?
A Better Measure: Using Active Share and Tracking Error Together
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