Choose index funds with low tracking error from "summary" of All About Index Funds by Richard A. Ferri
When selecting index funds for your investment portfolio, it is crucial to pay attention to the tracking error of each fund. Tracking error is the measure of how closely a fund's performance aligns with that of its benchmark index. A low tracking error indicates that the fund closely mirrors the index's performance, while a high tracking error signifies significant deviations from the benchmark. Funds with low tracking error are desirable because they offer investors a high level of confidence that their returns will closely match those of the underlying index. This is particularly important for index fund investors who prioritize consistency and predictability in their investment outcomes. By choosing funds with low tracking error, investors can effectively capture the returns of the market or asset class they are targeting. On the other hand, funds with high track...
Similar Posts
Take a disciplined approach to investing
Investing can be a daunting task, especially for those who are new to the game. With so many options and strategies available, ...
Make informed decisions by conducting thorough research
To navigate the complexities of the financial markets and build a successful investment portfolio, one must be diligent in cond...
Stay informed about the companies you invest in
As an intelligent investor, it is crucial to keep yourself updated about the companies you have invested in. Monitoring their p...
Monitor key financial indicators and ratios for investment opportunities
To increase your chances of success in investing, it is crucial to keep a close eye on key financial indicators and ratios. The...
Speculating is not the same as investing
Speculating refers to the act of making investments based on predictions about the future. It involves taking calculated risks ...
Make use of dollarcost averaging
Dollar-cost averaging is a simple and effective strategy that can help you take advantage of market fluctuations without having...
Take advantage of dollarcost averaging
One way to reduce the risk of making an ill-timed investment is to invest a fixed amount of money at regular intervals, regardl...
Stay resilient in the face of financial obstacles
Building wealth requires staying resilient in the face of financial obstacles. To achieve financial success, one must be prepar...
Keep your investment strategy simple and focused on your longterm goals
When it comes to investing, simplicity is key. Keeping your investment strategy straightforward and easy to understand will hel...
Fear and greed can drive markets to extremes
Fear and greed are the primary driving forces behind market movements. When fear grips the market, investors become desperate t...