Closet trackers definition
A closet tracker is a fund that is supposed to be actively managed but in fact is run in a hands off manner and only manages to make returns akin to those of a real tracker fund.
There have been several scandals involving closet tracker funds whereby investors pay high fees for outperformance but these would be unachievable given the hands-off way in which the funds were being run.
In these cases, investors would have been better off invested in a real tracker fund that tracks the performance of benchmarks like stock indexes because the fees would have been lower. See also closet indexing.