Recommendations & StrategiesQuestion 73 of 100
An adviser evaluates a mutual fund's performance against a benchmark index. The value that shows how closely the fund tracks the benchmark is best captured by:
a.The fund's expense ratio alone
b.The fund's turnover ratio
c.The fund's sales load
d.R-squared and tracking error relative to the benchmark
Explanation
R-squared indicates how much of a fund's movement is explained by the benchmark, and tracking error measures deviation from it. Together they show how closely the fund follows its index. Expense ratios and loads relate to cost, not tracking fidelity.
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