CFA III Volume 6, Reading 36, Active Share

Hi All, quick question on the 2020 curriculum p258. Exhibit 6.

This has been asked by many people but I cannot find an answer.
Active share = how your portfolio weight deviate from benchmark
Active risk (tracking error) = how your portfolio volatility (s.d.) different from benchmark

all good here. but in exhibit 6 it says diversified stock pickers will have higher active share than sector rotator. how? In my view, diversified picker would be picking sub-set of the benchmark while sector rotator can rotate to a sector that is concentrated and outside benchmark. Thanks.


Not exactly.

It’s the standard deviation of the difference between your portfolio’s returns and the benchmark’s returns.

Sector rotator means replicating sector’s index -> low active share