Having already covered Growth Funds and Income Funds, part four of our Investment Basics mini-series examines another type of investment fund: Tracker Funds.

What are Tracker Funds?

Whereas Growth Funds and Income Funds are ‘actively-managed’ investment funds, with Fund Managers making decisions on specific companies to invest in, Tracker Funds are a different type of investment fund, known as ‘passive funds.’

Investment decisions in tracker funds are not made by human Fund Managers. Instead, tracker funds pool your investment along with that of other savers into a fund which is managed by sophisticated computer programmes.

Tracker Funds align to a specific stock market index, such as the FTSE 100. The programme invests the fund into some or all of the companies listed on that index, selecting them based on an analysis of their performance, with the aim of the fund matching the growth rate of the overall index.

Tracker Funds tend to charge lower fees to investors due to the lower running costs possible when not using a Fund Manager. These can make tracker funds an attractive option to investors on a lower budget.

Whilst Tracker Funds do have their place as part of a wider investment portfolio with some advisors recommending these due to their lower price, McCrea do not include these as part of our own personal discretionary fund portfolios.

When considering your investment strategy, our award winning team will consider your overall financial situation as well as your goals, ensuring our recommendations meet your individual needs. Whether you’re new to investing or looking to review your portfolio, a free no-obligation chat on our personalised financial planning approach may be the first step towards achieving your long-term goals.  

Next Up: Pensions