Active share percentage shows how much a mutual fund’s portfolio differs from its benchmark index. A high active share means the fund is taking unique investment decisions, while a low active share means it is closely following the index.

What Does Active Share Percentage Mean in Mutual Funds?

Active share percentage tells you how different a mutual fund's investments are compared to a benchmark index like Nifty 50 or Sensex. If a fund has an active share of 80%, it means 80% of its stocks are different from the index. This shows how actively the fund manager is trying to beat the market.

Why Is Active Share Important for Investors?

Active share helps investors understand if the fund manager is actually making unique decisions or just copying the index. A high active share means the fund is truly active and trying to give better returns. A low active share may mean the fund is like a passive index fund but with higher fees.

What Is Considered a Good Active Share?

An active share above 60% is considered good. It shows the fund manager is taking strong investment calls and not just mimicking the index. Funds with very high active share (above 80%) are considered truly active and may offer higher returns, but also come with higher risk.

Does Higher Active Share Always Mean Better Returns?

Not always. While a high active share shows different stock picking, it does not guarantee better returns. It depends on the skill of the fund manager. Some funds with high active share may still underperform the market. So, look at both active share and past fund performance before investing.

How to Use Active Share in Your Investment Plan?

If you want higher returns and can take some risk, you can choose funds with high active share. These funds aim to beat the market. If you want stability and lower costs, passive funds or low active share funds may be better. Choose based on your goal and risk level.