Index Hugger
What is an Index Hugger?
An index hugger is a type of mutual fund whose performance closely tracks a major stock index.
How Does an Index Hugger Work?
An index hugger is also referred to as a closet tracker.
An index hugger is an actively-managed fund whose value fluctuations closely mirror those of a major market index (e.g. the Dow Jones or the S&P 500). For instance, if the Dow Jones experiences a 500 point rise in value, an index hugger will perform in a very similar manner.
Why Does an Index Hugger Matter?
In most cases, it's better for an investor to invest in a low-cost index ETF rather than paying for an actively-managed index hugging fund. The only reason to consider paying higher costs for a managed fund is if the portfolio manager has a track record of outperforming the market. An index hugger, by definition, will not give you that added benefit.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
