jälgimisvead

Jälgimisvead, also known as tracking errors, are discrepancies that occur between the performance of an investment fund, such as an index fund or ETF, and the performance of its underlying benchmark index. These errors arise because it is practically impossible for a fund manager to perfectly replicate the exact holdings and weightings of an index. The goal of an index fund is to mirror the performance of a specific market index, like the S&P 500 or the Nasdaq 100. However, various factors can lead to deviations.

Common sources of jälgimisvead include transaction costs, management fees, and dividend reinvestment timing. When a fund buys or sells securities to match the index, it incurs brokerage fees and other trading expenses, which reduce overall returns. Management fees, charged by the fund provider, also directly impact performance. Furthermore, the way dividends are collected and reinvested by the fund can introduce small timing differences compared to the index.

Other contributing factors can include sampling methods used by fund managers, especially for very large or complex indices, where they may only hold a representative sample of the index's constituents. Corporate actions such as stock splits, mergers, or special dividends can also create temporary tracking differences if the fund's adjustments are not perfectly synchronized with the index provider's. The presence of cash drag, where a fund holds a portion of its assets in cash for liquidity or to meet redemptions, can also lead to underperformance relative to a fully invested index. Investors in index funds should be aware that while jälgimisvead are typically small, they do exist and will result in the fund's performance not exactly matching that of its benchmark.