UK regulator forced a number of asset management firms to pay £34m compensation to customers for “closet indexing” Closet indexing means funds are presented as higher cost active, but actually just hug their benchmarks We estimate there is €0.4 to €1tr of assets in “closet index” funds in Europe, depending on what criteria are applied. Either way, fund houses have been warned “Mutton dressed as lamb” is a derogatory old saying of something or someone that’s dressed up to look better than it is. In olden days, some dodgy butchers would dress mutton up to look like lamb to get a higher price. I’ve got nothing against mutton. It offers good value for money and does a nutritious job. But I don’t want to be given one thing when sold another. Some “active” funds that actually hug an index is another form of misrepresentation. And this month, the UK regulator got tough forcing a number of fund houses to pay £34m compensation to custome...