Letter to DG FISMA regarding closet indexing disclosure

In 2014, the Danish financial supervisor revealed it had found that almost a third of Danish equity funds were in effect expensive clones of the indices, or « closet indexers »: mutual funds that claim to be actively managed, but that in reality charge high “active” fees for index-like performance, which would warrant much lower management fees. Typically low cost equity index funds such as index ETFs charge five to ten times lower fees than active ones. Therefore, the investor detriment is very important in that case.

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