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A portfolio manager may need to adopt a more appropriate ESG benchmark rather than a broad market benchmark if the degree of exclusions results in:
Suggested Answer: C
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3 comments · newest first
DA
Darci
3 days ago
I’m leaning towards A since low active share usually means the portfolio is closely tracking the benchmark, but I’m not confident about the tracking error part.
FL
Fletcher
8 days ago
I remember practicing a similar question where exclusions impacted active share. I feel like C could be a possibility too, but it seems less likely.
MU
Murray
13 days ago
I think the answer might be B because if there are a lot of exclusions, it could lead to high tracking error, but I'm not completely sure.