In this workout, we are asked to calculate the active share for the following fund which has five different Investments Investments a to e and we are also given the weights that the fund has in each of these individual Securities and also the weights that the index has in these individual securities.

To calculate the active share we need to identify the difference between the fund weights.

and the index weight the problem is if we calculate this for every one of the five positions, there's going to be some positive and some negative differences as we have some underweight and some overweight positions within the fund as compared to the index.

To calculate active share what we need to do is get rid of those negative signs and we do that by using the absolute function or APS.

Which will then allow us to identify.

the absolute difference between the weights in the fund and the weights in the index.

The active share calculation then requires us to add up all of those absolute differences.

And then finally to calculate active share we need to take the sum of the absolute differences between the Benchmark and the portfolio and divide that by two.

That gives this portfolio an active share of only 12% indicating that there is a relatively low amount of positions held in different weights to those of the Benchmark. This is partly driven in this example by the very low number of Securities that are held within the Benchmark and the portfolio.