From: "Stephen Burke" 
Newsgroups: uk.finance
Subject: Re: Are all tracker isas the same?
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Date: Thu, 18 Sep 2003 20:28:48 +0100

Terry Harper  wrote:
> All tracking errors seem to be below the index. Very few, if any,
> trackers actually outperform the index, even when accrued dividends
> are taken into account. Quite a lot underperform by a significant
> amount.

That isn't tracking error, it's the effect of charges. Funds which aim to
track tightly may in fact have higher charges than ones with bigger tracking
errors because they will have to deal more often. As an extreme example, if
you buy equal amounts of all 100 FTSE companies and never trade again your
tracking error against the FTSE will be pretty big, but your charges will be
zero, so on average you should expect to outperform a FTSE tracker.

-- 
Stephen Burke