Discuss about the tracking error components

Reference no: EM131781183

Question: You are reviewing a report by a portfolio manager that indicates that a fund's predicted (forward-looking) tracking error is 94.87 basis points. Furthermore, it is reported that the predicted tracking error due to systematic risk is 90 basis points and the predicted tracking error due to non-systematic risk is 30 basis points. Why doesn't the sum of these two tracking error components total up to 94.87 basis points?

Reference no: EM131781183

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