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An investment fund that tracks the price of an asset or group of different assets. They can track a range of different areas, from an individual sector to an entire stock market index.
A tracker fund is a financial asset that’s been set up to mirror the price movements of an underlying market index. The fund doesn’t aim to outperform the index but instead, aims to offer direct exposure to that index’s price movements - by replicating or ‘tracking’ its performance.
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Tracker funds work by giving you direct exposure to a broad group of companies with a single investment. They are created by a fund provider – examples include Vanguard or Legal & General – and are looked after by a fund manager.
Tracker funds are what’s known as ‘passive investments’. This means that the fund manager doesn’t decide what to invest in, and you don’t have to worry about deciding what goes into the fund. Instead, the fund manager will invest in the same assets that are included in the underlying index that the fund tracks, according to each asset’s weighting in that index.
In doing so, the fund will closely ‘track’ the underlying index’s price movements – and you can invest in the tracker fund to get exposure to the index’s performance.
Investing in tracker funds is low-effort – you need to put work in at the start to research a fund and make sure it’s right for you. But once you’ve invested, the fund manager will take care of ensuring the fund is performing as it should.
Here are some examples of tracker funds that we offer at Moneybox.
|H2||What is a tracker fund?|
|Overview||A tracker fund is a financial asset that’s been set up to mirror the price movements of an underlying market index. The fund doesn’t aim to outperform the index but instead, aims to offer direct exposure to that index’s price movements - by replicating or ‘tracking’ its performance.|
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest.