Tracking Errors on Bond and Commodity ETFs
The table below shows the tracking error of Canadian bond and commodity ETFs in 2010. To make sure you understand these numbers in their proper context, see my earlier post on tracking errors for Cana [...]
Tracking Errors on Canadian ETFs
An index fund’s tracking error is the difference between the return of the fund and the return of its benchmark index. It’s an important measure of how well your index funds are performing, and it's w [...]
How to Track Down Tracking Error
How do you measure the performance of an index fund? That sounds like a simple question, but it’s one I think many investors still have trouble with. Otherwise I wouldn’t routinely get questions like, [...]
Indexing’s Dirty Little Secret
“Most actively managed mutual funds underperform the market.” Couch Potato investors sing this refrain all the time in defense of ETFs and index funds. I’ve done it many times myself — a bit smugly, I [...]
International Tracking Error: Part 3
In this final post in the series on why international index funds performed so poorly in 2009, it’s time to look at currency hedging. Currency hedging is a strategy designed to smooth out the fluctuat [...]
International Tracking Error: Part 2
International index funds and ETFs showed large tracking errors in 2009. In my first post on this topic, I explained how the time differences between North American and overseas markets can make it ap [...]
International Tracking Error: Part 1
In a previous post, I pointed out that many international equity ETFs showed large tracking errors in 2009. For example, the iShares MSCI EAFE Index Fund (XIN), which tracks European and Japanese stoc [...]
Tracking Errors on iShares ETFs
About a week ago, iShares released its annual Management Reports of Fund Performance, which disclose how well each ETF performed in 2009. I highly recommend that every ETF investor take the time to lo [...]