GlossaryETFs & Index Funds

Tracking Error

How closely an index fund or ETF follows the index it aims to replicate. A small tracking error means the fund mirrors its benchmark well; a larger one means it drifts from it.

Related terms

ETF Expense Ratio NAV

Related lessons

beginnerETFs & Index Funds

What Is An ETF?

A complete guide to exchange-traded funds: what they are, how they deliver instant diversification, how they track an index, why low costs matter so much, the main types, and the risks.

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