The goal of the passive portfolio manager is to minimize

Question

Quizplus · Accepted Answer

The goal of a passive portfolio manager is to replicate the performance of a benchmark index, so the objective is to minimize tracking error, which measures the deviation of the portfolio return from the benchmark return. A lower tracking error indicates that the manager has done a better job of replicating the benchmark. Alpha measures the excess return of the portfolio compared to the benchmark, beta measures the sensitivity of the portfolio return to changes in the benchmark return, standard error measures the accuracy of an estimate, and portfolio risk is the overall risk of the portfolio.

The Goal of the Passive Portfolio Manager Is to Minimize