The smaller the fund tracking error, the better. In the same type of fund, the smaller the tracking error, the better the fitting degree between the index fund and the underlying index. The higher the fitting degree, the better the performance, the larger the scale, and the less the pressure of large redemption. The less pressure, the better performance, forming a virtuous circle.

What is the tracking error?

The tracking error of index funds refers to the deviation between the return rate of index funds and the underlying index (or performance comparison benchmark). Simply put, in the process of tracking the trend of replication index, there will be some small deviations, which we call tracking errors.