Tracker Fund

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DEFINITION of 'Tracker Fund'

An index fund that tracks a broad market index or a segment thereof. Such a fund invests in all, or a representative number, of the securities within the index.

Also know as an "index fund".

BREAKING DOWN 'Tracker Fund'

The term "tracker fund" comes from the tracking function of index fund management, which attempts to replicate the performance of a market index.

Investing in an index fund is a form of passive investing. The primary advantage to such a strategy is the lower expense ratio on an index fund. Also, a majority of mutual funds fail to beat broad indexes such as the S&P 500.

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