In theory, it should be: index funds (ETF) to generate the market rate of return, because they represent a stock or bond, you have to pull off some minor fees. But quite so simple, the world is not yet. Not everything that is Packed in an ETF, put in there also, says the American investment Fund company Vanguard, the fourth-largest provider of this Fund in the world.

Martin Hock

editor in the economy.

F. A. Z.

Because it compares the deviations from the underlying Index’s, sometimes a considerable difference. This “Tracking Error” is about a ETF Comstage on the American stock index S&P500 of 0.46 percentage points in a year. By contrast, a Fund of iShares depends on the Index only to a deviation of 0.02 percentage points.

The reason for this is that the construction of ETFs is so easy, that, so to speak, mechanically, only the values of the index are purchased in proportion. In the case of the S&P 500 exchange-rate effects are added. But in fact, even index funds need to be managed differently, however, than in conventional managed funds.

“If you have an Index with more bit values based on, such as the Euro Stoxx 50, then the implementation of an ETF may be mainly a technical question,” says Andreas Zingg, head of ETF sales specialists Europe by Vanguard. “But in the case of indices with a 600 or 7000 values you must provide, as the provider a representative selection of the Index, which reflects its development as accurately as possible.” From the universe a Sub needs to be formed-the universe. In the case of bonds, for example, it is not always easy to depict the term structure for a large Index, each date exactly. In emerging markets, issues of securities custody.

customers should be a fair price

With its power to get Vanguard was very pleased, says Zingg. In terms of “Tracking Error” is one of the market leaders, what is due, not least, low cost. Because, of course, different fees to play in case of deviations a significant role. “Our goal as an ETF provider is not to beat the Index, but to achieve at least the Index return minus the total cost. In fact, the deviation of our ETFs is lower than the total cost.“ In special situations, however, is sometimes powerless.

“the day after the Brexit, the markets fell, at the same time was a holiday in Sweden and Denmark. However, because the customer should get a fair price, you could not measure the net asset value of ETFs, with European stocks as in the Index at the Closing prices of the previous day, because then the seller would have been allocated before to the detriment of the existing investors. So, we have adjusted the net asset value to the current value. This then led to a Tracking Error of 0.2 to 0.3 percentage points,“ he says. This was, incidentally, the normal value for bond and emerging market ETFs. For equity ETFs, this deck-points, usually about 0.04 percent.