The financial media and many academics like to bash "active" money management. We often read about how most fund managers do not beat benchmarks. We are of a different opinion. Most money managers do not beat the market because they are too closely invested like it. "True" active management should be "benchmark agnostic". Active Share is a simple but effective measure of how a portfolio manager is deviating from benchmarks.
The attached paper shows how an average manager with a high active share performs compared to the markets. Imagine a good one!
Investors - even professional ones - are driven by their emotions. In most cases investors are over-optimistic about their ability to predict the future. This generally translates in excessive trading and bad results. We attach here one of the most interesting studies about excessive trading and poor investment results.