HXT should show less tracking error than XIU because (a) the MER is cheaper and (b)
the index tracking methods are completely different (HXT employs a swap to track the index whereas XIU holds the stocks directly).
Not exact matches
One such
method,
tracking error volatility, measures the standard deviation of the difference between a manager's returns and the
index returns.
Nevertheless,
tracking income cost by this straightforward
method is a reasonable proxy for the cost of future income, and S&P DJI provides this metric monthly as part of its S&P STRIDE
Index Series offering.
The difference in
tracking errors is probably due to the different
methods employed by the ETFs to
track the
index.
I used to be guilty of trading too frequently, but since have signed up to the lazy
method of investing for the long term in
index tracking ETFs.
Once the
index allocations are chosen, the issuing company uses a crediting
method to
track the performance of the chosen
indexes.
How a particular stock
index tracks the market depends on its composition the sampling of stocks, the weighting of individual stocks, and the
method of averaging used to establish an
index.
Not sure if this is still true, but when Vanguard launched their ETFs, I read somewhere that they used a patented
method whereby the ETF shares were a unique class of interest tied to their mutual funds that
track the same
indices.
The empirical results shows that the performance of
index tracking based on the neural networks is better than that of other
methods mentioned in the literatures.
Since
index funds are built to
track a specific
index, a fund uses the same weighting
method on the stocks it owns.
This means the ETF provider will use replication
methods in hopes of
tracking the underlying
index since they don't have enough assets to buy all the postions.
Evaluating and validating abundance monitoring
methods in the absence of populations of known size: review and application to a passive
tracking index.
A System to Manage Leads — Some organization
method, whether it is an online database, or even
index cards, too keep
track of the leads, when you need to call people back, and most importantly, measure how many calls / emails you are getting, and how many clients you are able to sign up for what the leads have cost you.