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Research done by Cafemutual shows that 20 large cap ETF schemes have the lowest tracking error of up to 0.05%. In fact, 10 such funds have tracking error of 0.03%.
Tracking error is the annualized difference between standard deviation of the fund and its benchmark. Simply put, tracking error is the extent to which returns of an ETF have deviated from its underlying index.
Interestingly, a sectoral fund has the least tracking error of 0.02%. Other categories which have funds with tracking error of 0.03% are factor and debt.
In the mid cap space, the lowest tracking error is 0.07%.
This research covers tracking errors of 131 ETFs.
Here are the top 3 funds across all categories with the lowest tracking error.
Large Cap
|
Ranking |
Scheme name |
Tracking error % |
|
1 (12 schemes)
|
Axis Nifty 50 ETF ICICI Prudential Nifty 50 ETF ICICI Prudential S&P BSE Sensex ETF Invesco India Nifty 50 ETF Kotak Nifty 50 ETF Mirae Asset Nifty 50 ETF Nippon India ETF Nifty 50 BeES Quantum Nifty 50 ETF SBI Nifty 50 ETF SBI S&P BSE Sensex ETF UTI Nifty 50 ETF UTI S&P BSE Sensex ETF
|
0.03
|
|
2 (9 schemes)
|
Aditya Birla Sun Life Nifty 50 ETF Aditya Birla Sun Life S&P BSE Sensex ETF DSP NIFTY 50 Equal Weight ETF HDFC Nifty 50 ETF ICICI Prudential Nifty 100 ETF Kotak S&P BSE Sensex ETF Nippon India ETF Nifty 100 Nippon India ETF S&P BSE Sensex SBI S&P BSE 100 ETF
|
0.04 |
|
3 (1 schemes)
|
HDFC S&P BSE Sensex ETF |
0.05 |
Mid Cap
|
Ranking |
Scheme name |
Tracking error |
|
1 (1 scheme)
|
ICICI Prudential S&P BSE Midcap Select ETF |
0.07 |
|
2 (1 scheme)
|
Mirae Asset Nifty Midcap 150 ETF |
0.08 |
|
3 (1 scheme)
|
ICICI Prudential Nifty Midcap 150 ETF |
0.09 |
Gold
|
Ranking |
Scheme name |
Tracking error |
|
1 (1 scheme)
|
UTI Gold ETF |
0.13 |
|
2 (1 scheme)
|
Nippon India ETF Gold BeES |
0.17 |
|
3 (1 scheme)
|
IDBI Gold ETF |
0.23 |
Silver
|
Ranking |
Scheme name |
Tracking error |
|
1 (1 scheme) |
ICICI Prudential Silver ETF Nippon India Silver ETF |
0.72 |
|
2 (1 scheme) |
Aditya Birla Sun Life Silver ETF |
0.80 |
Debt
|
Ranking |
Scheme name |
Tracking error |
|
1 (1 scheme)
|
Nippon India ETF Nifty 1D Rate Liquid BeES |
0.03 |
|
2 (1 scheme)
|
SBI Nifty 10 yr Benchmark G-Sec ETF |
0.14 |
|
3 (1 scheme)
|
ICICI Prudential Nifty 5 yr Benchmark G-SEC ETF |
0.23 |
International
|
Ranking |
Scheme name |
Tracking error |
|
1 (2 scheme)
|
Motilal Oswal NASDAQ 100 ETF Nippon India ETF Nifty 50 Shariah BeES |
0.13 |
|
2 (1 scheme)
|
Nippon India ETF Hang Seng BeES |
0.32 |
|
3 (1 scheme)
|
Motilal Oswal Nasdaq Q 50 ETF |
0.61 |
Factor
|
Ranking |
Scheme name |
Tracking error |
|
1 (1 scheme)
|
ICICI Prudential Nifty 100 Low Volatility 30 ETF |
0.03 |
|
2 (1 scheme)
|
SBI Nifty 200 Quality 30 ETF |
0.04 |
|
3 (1 scheme)
|
Kotak Nifty 50 Value 20 ETF |
0.05 |
Flexi
|
Ranking |
Scheme name |
Tracking error |
|
1 (1 scheme)
|
ICICI Prudential S&P BSE 500 ETF |
0.03 |
Sectoral/Thematic
|
Ranking |
Scheme name |
Tracking error |
|
1 (1 scheme)
|
Aditya Birla Sun Life Nifty Healthcare ETF |
0.02 |
|
2 (1 scheme)
|
ICICI Prudential Nifty Private Bank ETF |
0.03 |
|
3 (6 scheme)
|
ICICI Prudential Nifty Bank ETF ICICI Prudential Nifty Healthcare ETF Mirae Asset Nifty Financial Services ETF Mirae Asset Nifty India Manufacturing ETF Nippon India ETF Nifty Bank BeES SBI Nifty Bank ETF |
0.04 |
Tracking difference is another important aspect that the research has captured.
Interestingly, a few passive funds have actually outperformed their benchmark returns marginally by delivering a positive tracking difference.
Tracking difference is simply the difference between returns generated by the fund and its benchmark.
Funds with positive tracking difference across categories are Motilal Oswal Nifty 50 ETF, Nippon India ETF Nifty Midcap 150 and Kotak Nifty IT ETF.
Here are the top 3 funds across all categories with the lowest tracking difference.
Large Cap
|
Ranking |
Scheme name |
Tracking difference |
|
1 (1 scheme)
|
Motilal Oswal Nifty 50 ETF |
0.01 |
|
2 (1 schemes)
|
Tata Nifty 50 ETF |
-0.01 |
|
3 (3 schemes)
|
Aditya Birla Sun Life Nifty 50 ETF LIC MF Nifty 50 ETF LIC MF S&P BSE Sensex ETF |
-0.02 |
Mid Cap
|
Ranking |
Scheme name |
Tracking difference
|
|
1 (1 scheme)
|
Nippon India ETF Nifty Midcap 150 |
0.31 |
|
2 (1 scheme)
|
ICICI Prudential S&P BSE Midcap Select ETF |
-0.23 |
|
3 (1 scheme)
|
ICICI Prudential Nifty Midcap 150 ETF |
-0.33 |
Gold
|
Ranking |
Scheme name |
Tracking difference
|
|
1 (1 scheme)
|
Axis Gold ETF |
-0.31 |
|
2 (1 scheme)
|
IDBI Gold ETF |
-0.35 |
|
3 (1 scheme)
|
Invesco India Gold ETF |
-0.66 |
Silver
|
Ranking |
Scheme name |
Tracking difference |
|
1 (1 scheme)
|
Aditya Birla Sun Life Silver ETF |
-0.25 |
|
2 (1 scheme)
|
Nippon India Silver ETF |
-0.42 |
|
3 (1 scheme)
|
ICICI Prudential Silver ETF |
-2.20 |
Debt
|
Ranking |
Scheme name |
Tracking difference
|
|
1 (1 scheme)
|
BHARAT Bond ETF - April 2031 |
-0.04 |
|
2 (1 scheme)
|
Nippon India ETF Nifty CPSE Bond Plus SDL Sep 2024 50:50 |
-0.06 |
|
3 (3 scheme)
|
BHARAT Bond ETF - April 2030 BHARAT Bond ETF - April 2032 Nippon India ETF Nifty SDL Apr 2026 Top 20 Equal Weight |
-0.10 |
International
|
Ranking |
Scheme name |
Tracking difference
|
|
1 (1 scheme)
|
Motilal Oswal Nasdaq Q 50 ETF |
-0.61 |
|
2 (1 scheme)
|
Nippon India ETF Hang Seng BeES |
-0.70 |
|
3 (1 scheme)
|
Nippon India ETF Nifty 50 Shariah BeES |
-0.79 |
Factor
|
Ranking |
Scheme name |
Tracking difference
|
|
1 (1 scheme)
|
Kotak Nifty 50 Value 20 ETF |
-0.18 |
|
2 (1 scheme)
|
DSP Nifty Midcap 150 Quality 50 ETF |
-0.21 |
|
3 (1 scheme)
|
ICICI Prudential Nifty50 Value 20 ETF |
-0.22 |
Flexi
|
Ranking |
Scheme name |
Tracking difference
|
|
1 (1 scheme)
|
ICICI Prudential S&P BSE 500 ETF |
-0.32 |
Sectoral / Thematic
|
Ranking |
Scheme name |
Tracking difference
|
|
1 (1 scheme)
|
Kotak Nifty IT ETF |
0.01 |
|
2 (1 scheme)
|
Aditya Birla Sun Life Nifty Healthcare ETF |
-0.06 |
|
3 (1 scheme)
|
Axis NIFTY IT ETF UTI Nifty Bank ETF |
-0.08 |
