Tracking Difference
Definition
What is Tracking Difference?
The actual return difference between an index-tracking fundA fund designed to reproduce the return of a specified index before fees and implementation differences. and its benchmarkA reference index or rate used to evaluate a fund's performance. over a period.
Example in practice
How This Looks in Practice
A fund returns 9.4% while its index returns 10%, creating a negative 0.6% tracking difference.
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