Why not trackers?

Chris Dillow

Chris Dillow

What’s wrong with tracker funds? In theory, these should be the core of investors’ portfolios. This is for a simple reason. The average investor - by definition - must hold the market portfolio. Most of us are around average so most of us should hold a tracker fund. If we’re more willing to take risk than the average, we should hold more of the tracker and fewer safe assets and if we're less tolerant of risk we should hold more safe assets and fewer trackers. But either way, our equity investments should be in trackers. Strictly speaking, this should be a fund that tracks the global equity market, but given high correlations between national stock markets, an All-Share tracker is a reasonable second-best.

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