Skip to content
ENExplore Calculators

Index Fund Tracking Error Calculator

Work out index fund tracking error instantly with clear inputs, formula shown and shareable results.

About Index Fund Tracking Error Calculator

Tracking difference is the simple return gap against the index; tracking error is the volatility of that gap. Most of the difference should be explained by the expense ratio — anything more points to cash drag, sampling or trading costs.

Formula

Tracking measures

Tracking difference = fund return - index return; tracking error = SD of that difference

Worked example

With the default values below, Index Fund Tracking Error Calculator returns Tracking Difference of -0.6000%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Fund Returnaccepts 0–100 %
11.6 %
Index Returnaccepts 0–100 %
12.2 %
Expense Ratioaccepts 0–3 %
0.35 %
Volatility Of The Return Differenceaccepts 0.01–10 %
0.4 %

Results

Tracking Difference
-0.6000%
Tracking Error
0.4000%
Drag From Expenses
-0.3500%
Gap Not Explained By Expenses
-0.2500%

Step by step

  1. 1Values used
  2. 2Tracking measures
  3. 3Tracking Difference= -0.6000
  4. 4Tracking Error= 0.4000
  5. 5Drag From Expenses= -0.3500
  6. 6Gap Not Explained By Expenses= -0.2500

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates for planning only. Market returns are not guaranteed, and rates, limits and tax rules change. This is not financial or tax advice — speak to a qualified adviser before acting.

Frequently Asked Questions

Which matters more?

Tracking difference tells you what you lost; tracking error tells you how reliably the fund follows the index.

Why might a fund beat its index?

Securities lending revenue, favourable dividend timing or sampling luck can all push a fund slightly ahead of a gross index.

Related Calculators

Index Fund Tracking Error Calculator | Calcrivo