Sampling
A passive index-replication technique where the fund holds a representative subset of the index's constituents rather than every name. Common for indices with thousands of holdings or with illiquid tails (total-market funds, emerging-market funds, broad-bond funds). Sampling reduces transaction costs and operational complexity but introduces some tracking error because the held subset will deviate slightly from the full index. Typical sampling-induced tracking error is 5-30 bps for major sampled funds.
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Active Management · Active Share · AI Revenue · Anchoring Bias · Cost of Capital · Creation Unit
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