How to buy and sell index tracker funds

Previously we’ve run through how to open an online broker account and how to buy and sell ETFs. Today we’re going to look at purchasing an index tracker fund. Next stop, the world – muhaha! (Oops, did I say that out loud? I meant to write: ‘Next step, a globally diversified passive portfolio’…) What is an index tracker fund? An index tracker fund is typically an Open Ended Investment Company (OEIC). In normal-person speak, this means a tracker fund is set-up as a company that you can buy and sell shares of. Index trackers are ‘open-ended’ because the number of shares in the company will rise and fall when investors buy or sell them from the manager of the fund. 1 Some tracker funds are still set up as Unit Trusts. These are structured as a trust rather than a company, and investors buy and sell units in the trust. Like OEICs these are also ‘open-ended’. From an everyday investor’s point of view, the two flavours mostly amount to the same thing. We’ll focus on OEICs, which we’ll refer…