<![CDATA[therefore, their performance is primarily determined by replication accuracy rather than by the ability to outperform the market. Maintaining low tracking error remains a major challenge, particularly in emerging markets where operational costs and market frictions may affect replication efficiency. This study examines the effects of expense ratio and illiquidity on ETF replication performance in Indonesia and investigates whether manager tenure moderates these relationships. Using a quantitative approach, this study employs an unbalanced panel dataset consisting of 29 equity ETFs listed on the Indonesia Stock Exchange during 2020–2025, resulting in 149 observations. The empirical analysis applies the Random Effect Model (REM) and moderated regression analysis. The findings reveal that expense ratio has a negative and significant effect on ETF replication performance, indicating that higher operational costs increase tracking deviation. In contrast, illiquidity does not significantly influence replication performance, suggesting that ETF-specific mechanisms, including creation-redemption processes and market-making activities, may reduce liquidity-related frictions. Furthermore, manager tenure weakens the adverse effect of expense ratio on ETF replication performance, highlighting the importance of managerial experience as an intangible capability in managing operational constraints. This study contributes to the ETF literature by integrating cost-efficiency and managerial-capability perspectives in an emerging-market context.]]>
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