Tracking error
Tracking error measures the variability of a fund's returns relative to its benchmark returns over a stated method and period.
Plain-language meaning
Tracking error measures the variability of a fund's returns relative to its benchmark returns over a stated method and period.
Why it is useful
Tracking error is useful as descriptive evidence when it is compared on the same definition, source, period, unit and exact listing. It is one input to research, not a verdict.
Where it appears in XMarketRadar
Look for Tracking error in Mutual Funds, ETF scanner, fund details, comparisons and risk/return views when source-backed data is available.
How it is calculated or sourced
XMarketRadar aligns fund and benchmark NAV/index observations by date, forms compatible daily active returns, calculates their sample standard deviation with divisor N−1, and annualises it with √252. Fewer than 30 aligned observations produce unavailable.
Inputs, period and unit
Read the disclosed inputs or source, observation period, bar interval, unit, native currency and scale. A value without its source and as-of context is incomplete; unlike units must not be combined.
Worked example
Illustrative only: if date-aligned daily active returns have a 0.05% sample standard deviation, XMarketRadar annualises tracking error as 0.05%×√252, about 0.79%.
What high and low mean
A higher or lower Tracking error value is descriptive, not automatically good or bad. Meaning depends on the instrument, comparison period, method and related evidence.
Positive, negative and genuine zero
Positive and negative Tracking error values retain the definition shown here. A genuine reported or computed zero is displayed as 0 and is not the same as missing evidence.
Limitations and common mistakes
XMarketRadar requires at least 30 date-aligned daily observations, uses sample standard deviation and √252 annualisation. IDCW/dividend-option NAV-only returns and segregated or side-pocket series are suppressed because payouts or recovery jumps make those percentage-return comparisons invalid without complete cash distributions.
Market-specific differences
Fund regulation, tax, NAV timing, fee presentation and share classes vary across all supported markets. Compare like fund type, currency, benchmark and plan/share class.
Suggested next steps
Open the related Funds terms below, then follow the matching Help Centre task guide and inspect Tracking error on an exact exchange listing. Confirm source, as-of time, units and unavailable reason before using it in research.
Educational information only; not investment advice or an order service.
This Tracking error tutorial is educational and descriptive. It is not investment advice, a price prediction, a recommendation, or an instruction to buy, sell, rebalance or place an order.