The resource for personal investors.
Index trackers aim to track the performance of a given index. For example, a FTSE 100 tracker will track that particular index. It can do this by holding all of the stocks in the index (which is preferable), or may hold a subset of stocks which broadly represent the index as a whole. When the index increases or decreases, the index tracker should change accordingly. Index trackers are highly automated, and run by computers. This keeps the costs low.