Closet indexing definition

Closet indexing involves an active fund manager managing a fund so that it closely, but not exactly, tracks the performance of the fund’s benchmark index.

Closet indexing definition

Closet indexing involves an active fund manager managing a fund so that it closely, but not exactly, tracks the performance of the fund’s benchmark index.

It’s a practise that’s frowned upon because active fund managers are paid fees to try and outperform the underlying index and an investor could pay lower fees in a passive fund that tracks the index. See closet trackers definition.

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