We are delighted to announce the release of our Winter 2018 ETF ratings. 1,015 Europe-listed & 968 North America-listed ETFs now benefit from a fully independent rating, covering all asset classes and the most sought-after benchmarks.
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The Tracking Error (TE) is a measure to assess how close an ETF tracks the index. This gives a reasonable tool to check the stability of the ETF tracking ability. While the volatility gives a general risk on the return of the ETF and is directly attached to the volatility of the index, the TE presents an additional risk measure that highlights the risk of the replication and not the Market risk.
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This Monday Morning Memo is written based on a speech by Jean-René Giraud, CEO at TrackInsight during the TrackInsight Investor Summit–Germany in Frankfurt on March 29, 2017.
The issue of physical versus synthetic replication has left investors with more questions and suspicion than clear responses. However, to focus on the above would be narrow minded when choosing the right investment for your portfolio.
The Exchange Traded Fund (ETF) market is growing, and passive investors need to have reasonable grounds for choosing this investment vehicle as well as robust selection criteria. Mr Bonelli highlights that Exchange Traded Fund selection should be carried in an investor-specific framework founded on statistical measurements related to tracking quality relevant to each investor.