Tracking Error

Measures how closely the fund replicates the performance of its underlying index.

Measures how closely the fund replicates the performance of its underlying index.

Fund

From Date

To Date

Tracking Error Formula

Step 1 - Obtain the NAV values and the TR Index values for each day of the total time period required

Step 2 - Calculate the percentage change in the NAV and the TR Index for each day over its previous day

Percentage change in the NAV =

NAV as on day (t) - NAV as on day (t-1)

NAV as on day (t)

Step 3 : Calculate the difference between the percentage change in the NAV and the percentage change in the TR index for each day

Step 4 : Calculate the Standard Deviation of the difference obtained from day (1) to day (n) in step 3

Step 5 : Calculate the annualised tracking error as per the formula given below :

Annualised Tracking Error = Standard Deviation obtained (Step 4 * sqrt (250))