trackers and indices

Bazn

hi

i was thinking of tracker funds, and how they aim to replicatethe performance of an index. now i realise that management charges (though low in trackers) and other expenses mean that it may slightly underperform the index.

however, where do dividends come in? with the ftse 100 yielding nearly 3% then surely that should outweigh any costs, resultin in the tracker outperforming the index (assuming it is an accumulation fund)?

so why is tracking error almost to the downside?

debbie42

Bazn wrote: »

hi

i was thinking of tracker funds, and how they aim to replicatethe performance of an index. now i realise that management charges (though low in trackers) and other expenses mean that it may slightly underperform the index.

Coincidentally this was just discussed in this thread on TheMotleyFool.