Median Tracker Fund Let me explain you the concept of median tracker fund with the following example: Suppose you are a fund manager with a mandate to run a fund by selecting stocks only from FTSE100 constituents. Number of stocks, weightage to each stock is your choice as a fund manager. Now, among many ways to benchmark or evaluate your actual fund's performance, one way is to compare your actual fund performance with the simulated median tracker fund. For this, you can run several simulations of fund performance by using various assumptions. For e.g. weight to each stock can be (1/n) assuming 'n' stocks in the fund or weight is the value-weight (as normally in case of indicies like FTSE100 or S&P 500). Another assumption can be related to probability of selection of stock from FTSE 100 (say 1/100). Once you run various simulations you can find the median of the performance of the simulated funds. Then your actual fund performance can be compared with the median performance of the simulated fund. Hope this helps. You can reply me back if you still have doubt.
