EFAMA has reviewed ESMA’s statement “Supervisory work on potential index tracking”, which sets out research to determine whether any indication of closet indexing could be found at EU level.  To contribute to the debate on this matter, EFAMA has prepared a paper, which highlights the limits of identifying closet index funds through a statistical analysis, drawing on recently published research papers.

The paper takes this analysis one step further by discussing how national competent authorities can identify closet index funds and whether there is a need to respond to closet indexing by clarifying and/or improving the current regulatory rules on fund disclosure.