What is a tracker fund?
You may have heard of tracker funds as a relatively low risk way to invest, but what are they exactly? A tracker fund is a type of investment fund that aims to track the performance of a specific market index, such as the S&P 500 or the FTSE 100 . Tracker funds are also known as index funds or passive funds. Tracker funds are managed by investment professionals who use algorithms and other tools to mimic the performance of the underlying index. Unlike actively-managed funds, which are managed by professional stock pickers who try to outperform the market, tracker funds do not attempt to beat the market. Instead, they aim to match the performance of the index they are tracking as closely as possible. Tracker funds offer investors several advantages. Because they are passively-managed, they typically have lower fees than actively-managed funds. This means that investors can keep more of their investment returns. Tracker funds are also considered to be more diversified than actively-...