You are reviewing a report by a portfolio manager that indicates that a funds predicted (forward-looking) tracking

Question:

You are reviewing a report by a 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? Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...