Why invest in Tracker funds?
Instead of having a manager who tries to pick investments to beat the markets, tracker funds – also known as passive or index funds – simply follow the overall performance of a particular market or index, such as the FTSE 100.
As they’re run using computer algorithms rather than with costly research and managers, these funds are significantly cheaper than the equivalent actively managed funds, and offer an attractive cost-effective option to use as a key part of a diversified portfolio. But it’s important to understand that unlike an actively managed fund, a tracker can never outperform the market or index it is linked to – as the name suggests, it will only ever follow it.
So if the FTSE 100 rose by 5% over the course of a year, a FTSE 100 tracker would go up by just under 5% once the annual fund charge had been factored in. Similarly, if the FTSE 100 fell by 5%, the value of your investment would fall by just over 5% because of the fund cost and charges.
Fund sectors
Our list is made up of funds from each of the investment sectors we believe are key for building a diversified portfolio. Remember that some sectors and types of funds are higher risk than others and that the mix of different funds you use to build your portfolio will affect how exposed you are to the likely ups-and-downs of the investment markets and the global economy. Find out more about the importance of diversification.
Overseas funds
Our selection includes funds domiciled in the UK or overseas. Where a funds is marked with * after its name, this product is based overseas and is not subject to UK sustainable investment labelling and disclosure requirements. Find out more about sustainable investment labels.
How do we select our tracker funds?
Because a passive fund doesn’t try to do any more than track the performance of the market it follows, we believe there’s no reason to pay more than you need to. The tracker funds on our Funds List are selected solely on cost – those featured are simply the cheapest available tracker fund we offer in each sector where a relevant product is available . The funds included in this selection are reviewed every six months, in June and December. To see any changes to the list, please check our additions and removals page.
Our 13 Fund Sectors are: