How can we solve the 'closet tracker' problem?

What is indisputable is the issue of 'closet trackers' has long been a serious blight on the reputation of the whole active management fund industry.

The problem of some providers charging more for a product which over the longer term is merely an index fund in disguise is one which has never really been properly addressed. Some would argue the process of natural selection is weeding out some of the worst culprits and they are disappearing from the fund universe - especially one would hope as advisers and fund buyers vote with their feet on behalf of clients. However, clearly this is a desperately slow and largely ineffective solution to a problem which European regulator ESMA identified as a concern last week, demanding further in...