The iShares Semiconductor ETF tracks semiconductor sector performance with major holdings like Broadcom, Nvidia, and AMD. SOXX has underperformed its benchmark, has a ...

"Some index funds rely on sampling to save on trading costs," Criscuolo says. "Sampling can introduce tracking error, positive or negative, into a fund's performance. Similarly, funds that track ...

So what use is a low TE if that means tracking a benchmark with volatile returns? Table 2 shows the standard deviation (absolute volatility) of the benchmark and, for good measure, the median manager.

Passive funds aim to mirror their benchmark indexes as closely as possible, making every basis point matter. But perfect tracking is a fantasy. While investors can ...