What does the term 'Breadth' measure in an actively managed portfolio?

The term 'Breadth' in the context of an actively managed portfolio refers to the number of independent active trades in the portfolio. This measurement captures how many different positions the portfolio manager is taking, reflecting the scope of active management efforts. A greater breadth indicates that the manager is actively engaging in multiple trades, which can signal high conviction or varied investment strategies across sectors or asset classes.

Breadth is important because it helps to assess the manager's ability to exploit market inefficiencies through a diversified approach. Managers with greater breadth are often viewed as taking on more opportunities, which could lead to enhanced performance if their selections are favorable.

The other options, while related to trading and portfolio management, do not accurately capture the definition of 'Breadth' as used in this context. For instance, the number of shares traded in a day and the total number of trades made do not convey the same independent investment diversification insight that breadth signifies. Additionally, the percentage of diversification pertains more to the dispersion of the portfolio across various assets rather than the active management aspect represented by breadth.