The Comprehensive Guide to

Passive Income Investing


Learn the secrets of how Paul Tracy generates over $XXX,XXX per month in passive income!

How to Become Financially Independent Through Passive Income Investing

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.

Ask an Expert about Index Hugger

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Index Hugger.

Be the first to ask a question

If you have a question about Index Hugger, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.