Sorting the Rebels From the Conformists

Tracking error helps you set expectations.

Mar 26, 2018

Mentioned: Fairholme (FAIRX) , Vanguard Global Equity Inv (VHGEX) , T. Rowe Price Equity Income (PRFDX) , Sequoia (SEQUX) , Templeton Global Bond A (TPINX) , Vanguard Growth & Income Inv (VQNPX) , Vanguard Global Capital Cycles Investor (VGPMX) , T. Rowe Price Comm & Tech Investor (PRMTX) , Hotchkis & Wiley Mid-Cap Value A (HWMAX) , Bausch Health Companies Inc (BHC)

This article originally appeared in the February issue of Morningstar FundInvestor.

Does your fund have a surprise in store? Tracking error might give you the answer. Tracking error is a favorite measure of the investment industry. It measures the volatility of a fund that is not explained by the fund's index. In other words, it measures how much a fund's returns have varied from the index's.

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Russel Kinnel has a position in the following securities mentioned above: FBNRX, TPINX. Find out about Morningstar’s editorial policies.

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