Indices · Index specialist topics · lesson 8 of 9 · 8 min read · David Alexander
Tracking difference and tracking error
tracking difference
How far a fund's return diverged from its index over a period. Tracking error is a different thing: the variability of that divergence. A fund can have large tracking difference and small tracking error - lagging consistently - and the two are routinely conflated.
This lesson is part of the advanced modules.
Modules 6 to 8 are included with a paid account. The definitional summary above is the whole of this page until then.