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Can partial replication affect performance?

Some indices contain shares which can be difficult to deal. These are typically smaller companies' shares or companies listed in emerging markets. However, it can affect any company where the value of shares traded daily is low. The ETP may choose to ignore these companies and instead purchase larger companies within the same index which can be acquired more easily. No two shares perform in the same way and the divergence in performance contributes towards the tracking error. This could count for or against an investor.

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