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They've put their money in the stock markets because on a longer-term basis, equity benchmarks should outperform cash. But most investors hate to be benchmark huggers when markets underperform.

Although most retail clients will never have heard of it, the concept of tracking error might as well have been invented for them.

In jargon, it is defined as the difference, measured in standard deviation, between the percentage returns a fund has made and its index.

In plain English, it’s the gap between the money that has been made by your fund and the money you could have made if you invested in the fund’s benchmark.

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