Tracking error

Definition:

In an indexing strategy, the standard deviation of the difference between the performance of the benchmark and the replicating portfolio.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Asset value

The net market value of a corporation's assets on a per-share basis, not the market value of the shares. A company is undervalued in the market when asset value exceeds market value.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio