KIC000075 - , What is Tracking Error The keytc evaluating...

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, What is Tracking Error The keytc evaluating how a manager is doing is the benchmark. Once a benchmark is chosen, we can compute what is called an active return. Active return is the total return for the portfolio - total return for benchmark. Tracking error is the standard deviation of the active return. Tracking error can be annualized by multiplying by the square root of the number of periods in the year. What do we expect for average active return and tracking error for Indexing? calculation of Tr.acklllll Errorfor Two Hypothetical Portfolios: Benchmark Is thI:! Lehman U.S. Aggregate Indil=>:(Portfolio Al Obso!r'.,.ri"" perinll -Jarnw:' 2007~ 2001;~ iI <lc:>. "l. .cbmul U.S. ~Ie 1DdoX calculation of Tracking Errorfor Two Hypotl1eUe-l1Portfolios: Benchmark Is tm. Lehman U.S. Ag9regate tTl kJ:: (portfolio B) ObE. .-vaIion period "J~' 2007-Deaonber 2001: "I.mman U.s. ~lc Index 11
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calculation of Tracking Error for TWD HypothetiCilI Portfolios: Benchmllrt<;
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KIC000075 - , What is Tracking Error The keytc evaluating...

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