Just having a small number of stocks in a manager's portfolio will help him achieve a high active share portfolio (for example, 20 stocks out of the S&P 500). In this scenario, the manager's active share would be comparatively large, but all of its stocks would come from inside the benchmark.

Owning stocks outside the index is another way to get a strong active stake. Consider a manager who uses the S&P 500 as benchmark but invests 50% of its holdings in Large Cap stocks listed globally and 25% in stocks listed domestically but not in the S&P 500.

What issues emerge in evaluating this portfolio's output in comparison to the first, particularly when both of the portfolios are consideredto be high active share?