Tracking Difference

Your ETF charges 0.20% a year. Can it trail its index by less than that?

Yes. The MSCI World "net" index assumes the full 30% US tax on dividends.

An Irish fund pays 15%, which is worth about 0.14% a year (justETF, 2025). Lending shares can add a little more.

0.20% fee minus 0.14% edge: a gap of about 0.06%, or €6 a year on €10,000 instead of €20.

That gap is the tracking difference. Check it over several years, not one.

Do you know your fund's real gap?

Education, not investment advice.

Read the sheet as text

Tracking Difference.
Fund return minus index return. The gap can be smaller than the fee: here is how.

The Fee: taken from the fund every year. −0.20%.
Extra Income: less US tax than the index assumes, plus lending. +0.14%.
The Gap: what you really trail the index by. −0.06%.

For example: €20 → €6 a year on €10,000: the fee, then the real gap. Built from real 2025 figures (justETF).
Check several years: the gap moves. That wobble is called tracking error.

Sources (3)

Cost of ETFs: TER vs TCOjustETF, 7 July 2023: tracking difference is the gap between the ETF's and the index's return; securities lending income or a more favourable tax treatment than the index assumes can narrow it. Checked 2026-11-02.
Why synthetic ETFs have the edge in US-dominated marketsjustETF, 9 July 2025: MSCI World yield 1.28% × US 71.5% × 15% ≈ 0.14% a year (the US tax an Irish fund pays). Checked 2026-11-02.
Tracking-Differenz vs. Tracking-ErrorjustETF: tracking error is the standard deviation of the gap. Checked 2026-11-02.