It sounds simple: Investors buy index mutual funds and exchange-traded funds to get the performance of a market index without having to pay the expenses associated with active stock and bond picking.
But not all index funds are created equal, and some track their benchmarks more closely than others. The amount by which a fund veers from the performance of the index it is trying to match is known as tracking error, and analysts often cite it as a reason to consider one fund over another.
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