Asset Allocators' Soapbox: The cost of 'closet tracking'

While we frequently lock horns with the passive camp, we think the real enemies are closet trackers. This sub-sector of the investment industry masquerades as active management to justify higher fees, but provides a service that is little different (and frequently inferior) to cheaper index trackers. The most obvious problem with closet trackers is that they are poor value for money. Holders of such funds are paying significantly more than holders of the cheapest index trackers, yet they receive worse results (mainly, but not entirely, because of the higher charges they pay). That'...