Getting started in investing: Part six

Updated

6. Why Trackers Make Sense

Having decided that we want a fund, how do we choose one?

The two basic types of funds Funds can be split into two basic types.There are 'active' or 'managed' funds where the fund manager picks and chooses the shares on your behalf, getting paid handsomely for the privilege we might add.

Then there are 'passive' funds that merely buy the whole market or a certain section of it. These are known as index trackers because they attempt to track an index. An index measures the overall performance of a group of companies, such as the FTSE 100 (the 100 largest shares on the London Stock Exchange).

Advertisement