Editing Index fund (section)

===Possible tracking error from index===
Since index funds aim to match market returns, both under- and over-performance compared to the market is considered a "tracking error". For example, an inefficient index fund may generate a positive tracking error in a falling market by holding too much cash, which holds its value compared to the market.

According to [[The Vanguard Group]], a well-run S&P 500 index fund should have a tracking error of 5 [[basis point]]s or less, but a Morningstar survey found an average of 38 basis points across all index funds.<ref>{{cite news |first=Anne |last=Tergesen |author2=Young, Lauren |title=Index Funds Aren't All Equal |url=http://www.businessweek.com/magazine/content/04_16/b3879125_mz070.htm |archive-url=https://web.archive.org/web/20040426102207/http://www.businessweek.com/magazine/content/04_16/b3879125_mz070.htm |url-status=dead |archive-date=April 26, 2004 |work=[[BusinessWeek]] |publisher=[[McGraw-Hill Companies]] |date=2004-04-19 |access-date=2007-02-20}}</ref>