What are tracking error strategies in investment?
Tracking error strategies are methods used by investors to measure how closely a portfolio follows its benchmark index.
Why is tracking error important for investors?
Tracking error is important because it helps investors understand the risk of deviating from their benchmark, which can impact returns.
Can you give me examples of tracking error strategies?
Sure! Examples include active management, index fund replication, and risk parity strategies.
How can I minimize tracking error in my portfolio?
To minimize tracking error, consider using index funds, regularly rebalance your portfolio, and maintain a consistent investment strategy.
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