Index Trackers

EdInvestor

Hi Kinster

There are two ways of investing in a tracker.

The first is to use your cash to buy one of the index tracker funds offered by the various fund management and insurance companies.

You can buy into these funds by contacting a discount IFA/broker which will rebate any fees and charges. You may wish also to put this fund into an ISA tax wrapper to avoid tax.

The other way is to set up a brokerage account (many are free) and buy an "I-share" or Exchange Traded Fund, which is a tracker in the form of a share.These have lower charges, and you trade them like normal company shares, except there is no stamp duty ( another tax). You can check their progress online.You can also put them in an ISA.

A tracker fund or share "tracks" the index.THe shares it holds are weighted according to the size of the listed companies.If you look at the FTSE All Share, the biggest companies are banks and oil/mining companies, so a lot of your money will be invested in those stocks.Some people (including me) think that tracker funds are riskier than generally thought for that reason.

Good luck with your investing

**Forum Team edit : This post has been edited slightly from it's original form as it was a little close to being considered financial advice**

paul666

The drawback with an ETF is that is pays dividends four times a year. If you don't want income then re-investing costs will make a FTSE ETF expensive.