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Investment and risk5.4 Unit trusts and OEICs - index tracking fundsIn this section, we describe how index tracking works, its potential advantages and pitfalls.
Index tracking funds aim to closely follow the performance of a...
Shortened demo course. See details at foot of page. ... funds usually charge much less than actively managed funds. There are three main methods of index tracking:
Full Replication Fund managers buy all stock in the relevant index in proportion to their weighting in that index. This will result in the closest match to ... Shortened demo course. See details at foot of page. ...models of the stock market to make buying and selling decisions.The disadvantage of this system is that markets are difficult to model statistically due to the many changing relationships that exist in them. Tracking error si...
Shortened demo course. See details at foot of page. ...plication method. Index tracking funds usually cost ...
Shortened demo course. See details at foot of page. ... to have higher charges than this.Fe... Shortened demo course. See details at foot of page. ...s.Some fund managers will outperform their benchmark index. Tracking the index gives no opp... Shortened demo course. See details at foot of page. ... the value by market capitalisation of the FTSE 100 is represented by about 10 companies. |
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