For Active Funds, Being Different From the Index Isn’t Enough

The popular active-share metric was designed to find mutual funds that simply mimic an index-fund-like portfolio while charging steeper active-management fees. But it may not be as adept at finding winners.

“If you buy an actively managed fund, at the least you want to make sure that the higher fee you pay gives you a different product than what you can get at a very low price,” explains Martijn Cremers, the co-creator of the active-share metric, which measures the percentage of a mutual fund’s portfolio that differs from…