Tracker Funds: How They Work vs ETFs

Tracker funds have become, over time, one of the most profitable and most popular investments on the market. They are the investment to hold in your portfolio above all if you are looking to make a profit. Despite their seemingly complex appearance, investing in tracker funds can be very easy and is accessible to every investor. If investing in tracker funds on the stock market appeals to you, you need at least a basic understanding of how they work. Beginner or professional, this article should interest you and shed a little more light on the subject.

How Do Tracker Funds Work?

In the tracker vs ETF comparison, the first thing to know is that a tracker fund, also called an ETF, is an index tracker fund listed on the stock exchange. Its purpose is to replicate the performance of a stock market index. If the value of an index rises, the value of the tracker fund should follow more or less the same trend. A tracker fund must therefore track the evolution of stock market indices. For example, if the CAC 40 index rises by 5%, the CAC 40 tracker or ETF should also rise by 5%.

Best Tracker Funds – Top 5

Here is our Top 5 selection of the best tracker funds on the stock market.

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• Lyxor DAX (DR) (for Germany) – This tracker tracks the value of the DAX 40 index in Germany. Over the last 3 years, this tracker has risen by more than 41%. It is one of the trackers on the market to have delivered strong performance in recent years. On average, over 5 years, its performance follows an upward trend.
• Lyxor S&P 500 UCITS ETF-DIST (for the USA) – This tracker tracks the value of the S&P 500 index, which brings together the 500 companies of the New York Stock Exchange. The S&P 500 is a benchmark in the equity market. On top of that, it offers strong liquidity and strong capacity for growth. Investing in the S&P 500 tracker is a good opportunity for you. What is more, it has a future as an investment.
• Lyxor Euro Stoxx 50 (DR) (for the eurozone) – This tracker aims to replicate the value of the shares belonging to the eurozone. These shares carry the largest market capitalization in this market. They therefore post very impressive prices and results. The price of this tracker is accessible to every investor and it performs very well.
• Lyxor CAC 40 (DR) UCITS ETF-DIST (for France) – This tracker brings together the shares of large-cap companies in France. In 2025, it has delivered strong performance with a share price up +28.82%. Investing in a tracker from your own country is ideal, as you can easily follow its evolution. So if you are in France, this tracker may be ideal for you.
• Lyxor Commodities Refinitiv/CoreCommodity CRB (commodities) – This tracker seeks to replicate the performance of the T&Reuters/CoreCommo CRB TR index. This index is made up mainly of commodities. In 2025, this tracker has risen by more than 50%. A strong rise compared with its fall in 2020. According to estimates, its progression is expected to continue this year.

The CAC 40 Tracker

• To begin with, the CAC 40 index brings together the shares of the 40 largest companies listed on the Paris stock exchange. The CAC 40 tracker therefore aims to replicate the performance of this index. For more than 10 years, the CAC 40 tracker has enjoyed noteworthy success.
• To track the CAC 40, you can buy all of the underlying securities directly, which is known as a physical tracker. If that does not suit you, you can buy derivatives that replicate the index. In this case, this is called a synthetic tracker.
• The CAC 40 tracker is nonetheless risky from certain points of view. For example, compared with other trackers such as the S&P 500 tracker, its value does not cover a global scale. Even so, the CAC 40 remains a strong-performing index in its home country and can be very interesting.

Why Invest in Tracker Funds?

While some investors are less enthusiastic about investing in tracker funds, others are very interested indeed. The reasons for investing in the stock market through tracker funds are quite numerous, such as:

• Low Cost – It is preferable to buy shares through a tracker fund rather than buying them one by one. What is more, buying several shares can be very expensive, and not every investor necessarily has the means to do so. For example, buying LVMH, L’Oréal and Hermès shares already costs more than 2000 euros. By contrast, buying a tracker can be less costly, and the cheapest tracker funds give you far more shares in your basket.
• A Multitude of Offers – Tracker funds are not limited to a few markets: by investing in a tracker, you get a wide selection of products. You are less exposed to risk and product diversification is possible. In addition, you can trade at any time. You are not restricted in what you do. A broad investment field is open to you.

Tracker Funds for Beginners

Index tracker funds first appeared on the market some thirty years ago. If investors seemed reluctant at first, today tracker funds are highly favored by them, especially beginners.

Tracker funds are highly profitable, but they remain no less risky. If you are a beginner, do the following before you start investing in tracker funds on the stock market.

Take the Time to Learn

• It is not very wise to jump into an investment without understanding anything about it. Before you take the plunge, make sure you inform yourself about tracker funds and the world of the stock market.
• To help you, you can take courses on tracker funds on the stock market. These courses can be free or paid. You can also ask your broker whether they offer training on the subject.
• Do not hesitate to ask investors who have already worked in the stock market. Their experience could be useful to you. As a beginner, make sure you seek information from knowledgeable people. This will spare you false information.

Use a Demo Account

• If the theoretical lessons on tracker funds have not helped you, you can move on to practice. Nobody is pushing you to jump straight into the market at the risk of losing all your capital. Instead, we suggest you practice investing in tracker funds on the stock market with a demo account.
• Demo accounts let you familiarize yourself with the stock market. This way, you can test trading tracker funds on the stock market and train. Thanks to the demo account, you will be able to understand how tracker funds work and how to invest in them. You will be able to develop strategies and get a glimpse of the possible risks and gains.
• To get a demo account, go to a broker that offers this option. Virtual funds will be provided so you can invest in simulated mode. After hours of practice on a demo account, you can move on to real investment in tracker funds on the stock market.

The Risks of Investing in a Tracker

Tracker funds are nevertheless risky, because unexpected changes can happen at any time. For example, a share can be removed from the index on which the tracker is based. A company can also change status or be liquidated at any time. Despite these risks, tracker funds remain among the most profitable investments on the stock market.

Which ETF Should You Invest In?

• It is very difficult to say which ETF to invest in, especially with the number of ETFs available on the market. However, if we had to make a choice, it would be the index ETF.
• It is far easier to invest in an environment you know. It is easier to follow the evolution of an index. What is more, since the equity market is the best known in the stock market, you will have more information about your index. An index ETF can be easier to invest in than other ETFs. However, it also has its drawbacks – the choice is yours.
• Since every investor has their own way of approaching the market, the choice of ETF to invest in differs from one person to the next. What is more, the ETF you invest in should depend on each investor and their knowledge of the market. In the end, nothing is imposed on you: the choice of ETF to invest in is rightfully yours.
• If index ETFs are not for you, you can invest in other ETFs. For example, you can opt for commodity ETFs, sector ETFs, or currency ETFs.

Where to Invest in ETFs in France?

The choice here will depend on your investment strategy and your means. The best place to invest in ETFs may be with a broker or a stock market platform. You can also invest in ETFs through a standard share account (compte-titres ordinaire), life insurance (assurance-vie), a PEA or even a PER.

It is also possible to choose where to invest in ETFs based on your geographic zone. According to some analysts, to make the most of ETF investing, it is best to choose ETFs in your own country.

Investing in Tracker Funds – Is It Profitable or Not?

The profitability of tracker funds on the stock market depends on each investor and their strategy. For our part, investing in the stock market with tracker funds can be highly profitable when you look at these advantages.

Time Savings and Reduced Fees

By investing in tracker funds, you can invest in several shares at the same time. This saves you from paying for the shares of an index one by one. The price comes out cheaper and you save more time.

Special Offers Dedicated to Tracker Funds

With the popularity of tracker funds, many brokers on the market have created special offers for investors. Thanks to these offers, commissions and fees are reduced. In addition, it is more convenient and investors have more choice.

Benefiting from the Profitability of Large Companies

By investing in tracker funds, you can benefit from the profitability of large companies. Indeed, in the event of gains, the return on investment can be very beneficial to you.

Read also: Tracker Funds Definition

Conclusion – Which Tracker Funds Should You Choose?

Tracker funds are very numerous on the stock market. As a result, it is very difficult to choose between them. The ideal would be to invest in a tracker fund whose components are not unknown to you. You will then find it easier to analyze and follow the evolution of your tracker. Choose a tracker whose value and growth potential allow you to envision a future for your investment. In short, the tracker to choose depends entirely on you and your reading of the market. To start your investment off on the right foot, remember to invest with the best broker on the market.

This article is educational in nature and does not constitute investment advice. The investments mentioned carry a risk of loss of capital.