Paying up for alpha. Small-cap active funds possess notably higher Active Share, offering greater differentiation from benchmark exposure and greater opportunity for alpha generation. As S&P 500 concentration has increased, large-cap active funds are increasingly forced into buying a subset of mega-cap stocks. This tendency to hug an ever-concentrated benchmark increases nominal performance risk as an increasing amount of capital is crowded into these few stocks whose market capitalizations dwarf the GDP of many countries. “Active Share” is calculated as the sum of the absolute difference between fund weight and benchmark weight across all stocks held by fund or benchmark, divided by two.