Tracker fund definition

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.

What is a tracker fund?

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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How do tracker funds work?

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.

 

Learn more about market indices

 

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.

 

Examples of tracker funds

Here are some examples of tracker funds that we offer at Moneybox.

  • Fidelity Index World (Global Shares): track the global stock market with shares in more than 1,600 companies like Apple and Amazon.
  • Fidelity Index Emerging Markets (Emerging Markets Shares): invest your money across a range of companies from developing markets, including Asia and Latin America.
  • iShares Global Property Equity (Global Property Shares): gain exposure to over 300 property companies across a range of industries, from residential to retail.
  • Legal & General Global Health and Pharmaceuticals (Global Health and Pharmaceuticals Shares): champion the healthcare sector by investing in companies like Johnson & Johnson and Pfizer.
  • Legal & General Global Technology (Global Technology Shares): back the building of new technologies by investing in the biggest tech companies like Google.
H2What is a tracker fund?
OverviewA 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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Investing glossary

It's important you know

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.

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