Do leveraged ETFs exhibit more tracking error than a regular ETF tracking the same index?
ETF Tracking Error:
ETF's are designed to track an index, but there are factors that prevent them from doing this perfectly. This tracking discrepancy is referred to as tracking error and it measures is the annualized difference between the ETF's daily performance compared to it's underlying index.
Answer and Explanation:
See full answer below.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
fromChapter 4 / Lesson 12
Leveraged ETFs are short-term trading vehicles that multiply the performance of their underlying index and can move wildly in any given trading session. Learn about leveraged ETFs and a few of the common risks associated with them.