An Evaluation of Tracking Error on World Indices ETFs Traded in India

The IUP Journal of Applied Finance, Vol. 20, No. 3, July 2014, pp. 41-52

Posted: 9 Jun 2015

See all articles by Harsh Purohit

Harsh Purohit

Banasthali Vidyapith

Nidhi Choudhary

Banasthali Vidhyapith

parul tyagi

Banasthali University

Date Written: June 8, 2015

Abstract

The Exchange Traded Funds (ETFs) are relatively new products in the Indian capital market, gaining popularity among investors in India. ETF has opened investment opportunities for retail as well as institutional investors. The investors have the option to expose their portfolio to overseas stock market and sector-specific market instruments through ETF and this opportunity comes with several benefits like lower cost, real-time investment and easy accessibility as compared to other instruments in the market. The ETF on the index of foreign country is one of the latest instruments in the Indian market. But such ETFs suffer from Tracking Error, whereby there is a difference between the mean return on ETFs and mean return on its underlying asset. The proposed study is an attempt to quantify this error using the methodology prescribed by the NSE and then evaluating its impact on the investments.

Suggested Citation

Purohit, Harsh and Choudhary, Nidhi and tyagi, parul, An Evaluation of Tracking Error on World Indices ETFs Traded in India (June 8, 2015). The IUP Journal of Applied Finance, Vol. 20, No. 3, July 2014, pp. 41-52, Available at SSRN: https://ssrn.com/abstract=2615773

Harsh Purohit (Contact Author)

Banasthali Vidyapith ( email )

Banasthali Vidyapith
P.O. Banasthali Vidyapith
Rajasthan, Rajasthan 304022
India
9887886320 (Phone)

Nidhi Choudhary

Banasthali Vidhyapith ( email )

P. O Banasthali
Banasthali
Newai, Rajasthan 304022
India

Parul Tyagi

Banasthali University ( email )

Banasthali Vidyapith
P.O. Banasthali Vidyapith
Rajasthan, Rajasthan 304022
India
8955392357 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
370
PlumX Metrics