Evaluating Index Fund Performance and Measuring Tracking Error in India

Exchange Traded Funds or popularly known as ETFs is very popular in foreign markets, but in India it is still at its initial growth phase. This paper examines the characteristics and performance indicators of all 40 exchange traded funds floated and traded on Indian stock market. The study reveals that on an average the ETFs coming under the index categories, reported better performance than Gold ETFs. Further, it was inferred that international ETFs were found to be most appropriate and efficient that traces the underlying benchmark more accurately. Key words: Index Fund, Tracking Error