Closet Indexes

[Clone]

If you can't beat the benchmark, sell the benchmark and take your skim off the top!

"There's a lot of reasons why it became really difficult to beat the S&P 500, and the biggest reason was the Federal Reserve — they just sucked all the alpha out of the market," Nelson said, referring to performance above market indexes. "A lot of guys just threw in the towel and became closet indexes."

Contra funds aren't always contrarian

 

[UpAnchor]

My half of the closet is simple enough to not require an index. Now DW's half, well...

 

[DrRoy]

Buying the straight index saves on fees. Those add up over time. Why pay someone to underperform?

 

[Clone]

Buying the straight index saves on fees. Those add up over time. Why pay someone to underperform?

My interpretation of that article was that some of the 'pros' are recognizing that they don't have much to sell on their own, so copy the index, put a fancy name on it, skim your percentage, and perform close to the benchmark.