Types and Structures of ETFs
By exposure
Index ETFs track broad benchmarks. The largest and cheapest category, with the tightest spreads.
Sector and thematic ETFs narrow the exposure. Higher fees, less diversification, and thematic products are frequently launched after a theme has already run.
Commodity ETFs either hold the physical good (gold, which is storable) or hold futures (oil and gas, which are not practical to store). The futures-based ones carry roll yield, which in persistent contango is a substantial ongoing cost that has nothing to do with the commodity's price.
Bond ETFs provide the largest structural benefit of the wrapper: a liquid exchange-traded instrument over an illiquid OTC market.
Active ETFs try to outperform rather than track.
Physical against synthetic
Physical replication holds the actual assets. Full replication buys everything; sampling holds a representative subset, which is common for indices with thousands of illiquid constituents.
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