The deviation and tracking error range of index funds is limited. For example, the absolute value of the daily average tracking deviation of ETF is generally less than 0.2%, the annualized tracking error is less than 2%, the daily average tracking deviation of ordinary index funds is less than 0.3%, and the annualized tracking error is less than 4%.
Tracking error is the standard deviation of deviation sequence, which reflects the fluctuation of deviation. The greater the fluctuation, the worse the accuracy of GPS. Similarly, for index funds, the tracking error reflects the risk of fund management to some extent. The greater the tracking error, the greater the risk of exposure.
Extended data:
Precautions:
1. Determine the fluctuation and tracking index of the fund. For example, a Shanghai-Shenzhen 300 index fund has a daily rise and fall of 2%, and its underlying index, the Shanghai-Shenzhen 300 index, is 2.2%. Note that the increase or decrease here may be positive or negative, and it is calculated according to the actual increase or decrease.
2. When comparing the same amount of data in the same period, we can only calculate the sum of squares of residuals without dividing by n and root sign, so the calculation amount and complexity will be reduced.
3. If the fluctuation data are all negative, such as -2% and -2.2%, then 0.2% and -0.2% have the same meaning, which is the difference between the actual fluctuation of the fund and the fluctuation of the tracking index. The meaning of square is to eliminate the sign of residual.
Baidu Encyclopedia-Tracking Error