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"<p><strong>The objective of an exchange traded fund (ETF) is to track as closely as possible the index on which the ETF is based in order to provide investors in the ETF the same performance relative to the market underlying the index.</strong></p> \n<p>Indices are based on theoretical calculations, however, which means that costs incurred in practice, for example, for the purchase or sale of securities represented in the index are not reflected in the index calculation. Nevertheless, these costs are charged whenever an index and its performance are replicated for an investment.</p> \n<p><strong>How closely an ETF tracks the performance of its underlying index is therefore critical. Ideally, the performance of the ETF differs from that of the index solely in the costs and fees incurred.</strong> Since for example indices tracking only the stock market of a single country apply different criteria for index replication compared to an index containing stocks from multiple countries, the criteria for an exact index replication differ from index to index. For these reasons, UBS ETFs utilize a variety of index replication methods.</p><h6>Full physical replication</h6> \n<p>The ETF invests in the securities represented in the index in accordance with their index weighting.</p><h6>Optimized physical replication</h6> \n<p>The ETF invests only in those securities represented in the index that are needed to achieve a performance very close to that of the index.</p><h6>Synthetic replication</h6> \n<p>The ETF invests in a securities portfolio and exchanges its performance for that of the index.</p>"
<https://www.ubs.com/global/en/assetmanagement/capabilities/etfs.html>