As an investment manager, you are tasked with constructing a passive equity portfolio that aims to closely track the performance of the S&P 500 index. One of the key considerations in this process is the concept of tracking error, which measures how closely the portfolio's returns match the returns of the benchmark index.

Define tracking error and explain how it is calculated. Discuss the factors that can contribute to tracking error in a passive equity investment and provide examples of strategies to minimize tracking error while still achieving investment objectives. Conclude with the importance of monitoring tracking error and its implications for performance evaluation.