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Anonymous
How do I calculate tracking error for ETF (eg. VOO)?
tracking error = return from portfolio - return from index
Need help with understanding which value in yahoo/google finance do I use?
Thank you.
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Chris
09 Apr 2021
Owner and Writer at Tortoisemoney.com
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It depends on the timeframe you wanna look at though. If you want 1Y, then you should be looking at the 1Y returns from both the ETF and the respective index. If you want YTD then you should look at YTD and so on.
To find the respective performance of the index, you can find it quite easily by just searching for the index name, e.g. Nasdaq-100 (^NDX), S&P500 (^GSPC).
Do note also that for large ETFs like VOO, the tracking error is often available online (as computed by other websites).