How to Manage Tracking Error with Greater Certainty
Published By: Hillsdale Investment Management Inc.| 22/10/2015
In the Canadian equity manager universe, there is no evidence that tracking error risk is proactively managed. This is especially surprising given that tracking error is an important measure of active investment management risk as it provides investors with a tool to estimate the expected variability of their manager’s value added. This paper examines two different techniques a Canadian equity manager can employ to manage tracking error risk.