How far a fund drifts from the index it follows
Tracking error measures how much an index fund's return differs from the index it aims to match. Fees, trading costs and the timing of index changes all contribute. The smaller it is, the more faithfully the fund follows. When two funds track the same index, read this number alongside their fees.
If the index gains 5.0% in a year and the fund gains 4.8%, the tracking error is 0.2%.
For learning, not investment advice. Decisions are your own.
StockFit · TrueNorthLabs Inc.