Index Hugger

Someone who just loves indexes. Like how tree huggers love the environment.

Also, in the world of finance, an index hugger is a type of actively-managed mutual fund that closely follows the performance of a particular index. See: Lipper.

Because the fund is actively managed, it comes with significant expenses (on a relative basis), making it an expensive way to latch onto the performance of an index. It's like hiring an expensive landscaping service to mow your lawn for hundreds of dollars when the kid down the street would do it for twenty bucks.

You have money you want to invest. You're overwhelmed by picking individual stocks and don't have time to research all the potential funds out there vying for your money. You just want your dough to track the S&P 500, the broad measure of stock market performance. If the market goes up 3%, you want to earn 3%. If the market dips 1%, you are fine losing 1% on that day.

Your best bet is to put money into an Exchange-Traded Fund, or ETF, that tracks the S&P 500. It's a low-cost way to have your investment track the general market.

However, your brother-in-law works for an index hugger tied to the S&P 500. The managers of the fund don't try to pick winners and losers. They just make sure their fund tracks the S&P 500, hoping to find just a few stocks that beat it, thus warranting their higher fees. Any move that index makes, their fund moves the same amount. It's the same action as the ETF, just more expensive. Your brother-in-law and his buddies skim fees off the top, cutting into your potential profits.