Cass: Funds must disclose underlying holdings to make active share a reality

Dr Nicholas Motson (pictured), a lecturer in finance at the Cass Business School, has called for greater disclosure of fund holdings in order to allow researchers to calculate retail funds' "active share".

The idea of active share – the extent to which funds’ holdings differ from the make-up of their benchmark – has gained traction this year as investors seek to root out “closet trackers” – funds which charge high fees but differ minimally from their underlying index. Last month, the Financial Services Consumer Panel’s report on fund charges proposed the Financial Conduct Authority make active share disclosure mandatory for UK funds. European regulators are also looking at the issue. For now, however, the ability to calculate active share is hamstrung by funds’ limited disclosure of the...