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.