--- title: "Meaning & Key Takeaway of: [With] closet indexing…you're paying a…" description: "\"[With] closet indexing…you're paying a manager a fortune and he has 85% of his assets invested parallel to the indexes. If you have such a system, you'..." image: "https://sms4smile.com/quotes/i/9d9/charlie-munger-458_assets_with-closet-indexing-you-re-paying-a-man_3084217.jpg" --- # \[With\] closet indexing…you're paying a manager a fortune… ![“[With] closet indexing…you're paying a manager a fortune and he has 85% of his assets invested parallel to the indexes. If you have such a system, you're being played for a sucker.” quote by Charlie Munger](https://sms4smile.com/quotes/i/9d9/charlie-munger-458_assets_with-closet-indexing-you-re-paying-a-man_3084217.jpg) [Download](https://sms4smile.com/quotes/i/9d9/charlie-munger-458_assets_with-closet-indexing-you-re-paying-a-man_3084217.jpg) [Open image](https://sms4smile.com/quotes/i/9d9/charlie-munger-458_assets_with-closet-indexing-you-re-paying-a-man_3084217.jpg) > “\[With\] closet indexing…you're paying a manager a fortune and he has 85% of his assets invested parallel to the indexes. If you have such a system, you're being played for a sucker.” [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Investing in a manager who merely mirrors index performance wastes fees and offers no added value. **In simple terms:** Paying high fees for passive-like management is foolish. Key Takeaway Avoid paying for services that simply replicate market indexes. Themes investment fees manager selection indexing Mood skeptical analytical Type cautionary advisory When to use this quote - retirement planning - portfolio construction - advisor evaluation Key Concepts agency theory principal‑agent problem cost of capital Questions to Reflect On - Are you paying for expertise or just a label? - How can you verify a manager’s added value? A Different Perspective Even low‑cost managers may underperform true index tracking due to hidden costs. ★ ★ ★ ★ ★ No ratings yet [Assets](https://sms4smile.com/quotes/about/assets/) [Assets Invested](https://sms4smile.com/quotes/about/assets-invested-5273646/) [Being played](https://sms4smile.com/quotes/about/being-played/) [Closets](https://sms4smile.com/quotes/about/closets/) [Customer](https://sms4smile.com/quotes/about/customer/) [Fortune](https://sms4smile.com/quotes/about/fortune/) [Ifs](https://sms4smile.com/quotes/about/ifs/) [Indexes Played](https://sms4smile.com/quotes/about/indexes-played-5273644/) [Indexing](https://sms4smile.com/quotes/about/indexing/) [Indexing Paying](https://sms4smile.com/quotes/about/indexing-paying-5273643/) [Invested Parallel](https://sms4smile.com/quotes/about/invested-parallel-5273645/) [Management](https://sms4smile.com/quotes/about/management/) [Managers](https://sms4smile.com/quotes/about/managers/) [Parallels](https://sms4smile.com/quotes/about/parallels/) [Paying Manager](https://sms4smile.com/quotes/about/paying-manager-5273647/) [Sucker](https://sms4smile.com/quotes/about/sucker/) ## Related quotes > [One could imagine a period like Japan13 years ago, however, in which indexing over time wouldn't work.](https://sms4smile.com/quotes/charlie-munger/one-could-imagine-a-period-like-japan13-years-ago-however-in-which/) [Charlie Munger](https://sms4smile.com/quotes/author/charlie-munger/) > [“It removes information from the market when I need more and more...Indexing is a waste heap--information so merged and muffled that it hides knowledge…](https://sms4smile.com/quotes/george-gilder/it-removes-information-from-the-market-when-i-need-more-and-more/) [George Gilder](https://sms4smile.com/quotes/author/george-gilder/) > [If the data do not prove that indexing wins, well, the data are wrong.](https://sms4smile.com/quotes/john-c-bogle/if-the-data-do-not-prove-that-indexing-wins-well-the-data-are-wrong/) [John C. 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