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Tracking Errors Of Exchange Traded Funds And Index Funds, Rupendra Paliwal
Tracking Errors Of Exchange Traded Funds And Index Funds, Rupendra Paliwal
WCBT Working Papers
Exchange traded funds (ETF) are one of the recent financial innovations widely viewed as significantly better investments than mutual funds given their lower fee structure and tax efficiency. Individual investors are increasingly using ETFs tracking most popular stock indices to achieve their investment goals. In some cases, investors are using these ETFs to replace index mutual funds in their long-term portfolios. Thus, it is important to compare the performance of widely held ETFs and index funds in terms of their ability to consistently track the underlying index. Another interesting research question is whether tracking errors of these two investment vehicles …