scorecardresearchWhen multiple funds are tracking the same index or sector, why do their returns differ?

When multiple funds are tracking the same index or sector, why do their returns differ?

Updated: 24 Mar 2022, 08:38 AM IST
TL;DR.
Even while all funds tracking the same index aim to invest money in the same ratio as the underlying index, there can be some variance due to a number of factors. Although this variation is little, there can be a considerable difference in the returns posted by similar index funds. Let us discuss the factors responsible for this variation.
Index funds and exchange-traded funds (ETFs) that use different strategies to tailor their portfolios to match an index are likely to have varying returns.

Index funds and exchange-traded funds (ETFs) that use different strategies to tailor their portfolios to match an index are likely to have varying returns.