##  [# Physical ETF Definition](/etf-education-center/etf-glossary/physical-etf) 

 

# Physical ETF Definition

 

 

Learn the definition of physical ETF and other ETF terminology from the etf.com glossary.



 

 

 

 

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[By ETF Glossary](/authors/etf-glossary)

 Jan 16, 2024

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## Learn more about Physical ETF

A Physical ETF, also known as a ""replication"" or ""in-kind"" ETF, stands out for its unique characteristic of physically holding the assets that constitute the underlying index. Unlike Synthetic ETFs that use derivatives, Physical ETFs directly own the securities in proportions mirroring the index. This approach, involving the actual ownership of underlying assets, enhances transparency, mitigates tracking errors, and fosters investor confidence. Physical ETFs excel in providing a clear and direct link between the fund's performance and the index it tracks, offering investors a tangible and straightforward investment vehicle for gaining exposure to diverse market segments.

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 [ ETF Glossary ](/authors/etf-glossary) 

 

 

  ETF Glossary is etf.com’s collection of key terms and definitions related to exchange-traded funds. ETFs are investment funds that are traded on stock…   [View Bio](/authors/etf-glossary)

 



 

 


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