Portfolio Metrics

Tracking Difference

Definition

What is Tracking Difference?

The actual return difference between an index-tracking fund and its benchmark over a period.

Example in practice

A fund returns 9.4% while its index returns 10%, creating a negative 0.6% tracking difference.

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The percentage of a portfolio invested across asset classes such as cash, bonds, shares, and property.

Spreading investments across assets, issuers, sectors, or markets to reduce dependence on one exposure.

The degree to which a portfolio depends on a small number of holdings, sectors, or issuers.

The identity and due-diligence checks a financial institution performs before serving an investor.

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