The demand from consultants and clients for zero tracking error drives him to a sub-optimal solution.

FORBES: Getting Over Index Investing With A Better Way

In order to achieve zero tracking error, the fund manager must hold exactly the index for every second of the day.

FORBES: Getting Over Index Investing With A Better Way

Zero tracking error trumps total return as the performance standard.

FORBES: Getting Over Index Investing With A Better Way

The expectation that an index fund will get EXACTLY the return of the target index sets the stage for an interesting problem: Zero tracking error is achievable, but it comes at a very high price.

FORBES: Getting Over Index Investing With A Better Way