Wednesday, December 29, 2010

Closet Index Fund

The term "closet indexer" is a semi-derogatory criticism of active fund managers that 'hug' the index, or include so many stocks in their portfolio that their returns effectively mimic the returns and volatility of an index fund. This can be cause for concern when the fund manager charges fees that are higher than a passive index fund.

Synonyms: Index hugger, Closet indexer

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