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What is tracking error?

Dhirendra Kumar explains what is tracking error and what all reasons may cause it

Transcript: An index fund is always tracking an index. Tracking error happens when the fund is unable to match the index movements. Say, there's an open-end fund that tracks Nifty and it goes up by 90 basis points, while Nifty itself goes up by 1%. The difference would result in tracking error.

This article was originally published on May 30, 2017.


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