When an investment is spread across a number of securities, the totality of these securities is referred to as the portfolio. The portfolio contains all equities, bonds, etc., in which the investor has invested. A portfolio containing a broad variety of assets is useful for the purpose of diversification.

Physically replicated ETFs

Physically replicated ETFs are the counterpart to synthetically replicated ETFs. In the case of physically replicated ETFs, the issuer actually buys the underlying financial instruments and holds them in a special fund. As a result, there is no additional issuer risk for the investor.

Investment in ETFs should generally be restricted to physically replicated ETFs.

Passive investing

Passive investing involves buying low-cost (index) funds which track the performance of a market (index) very reliably. Due to its low costs in particular, passive investing enables investors to earn attractive returns for the same risk.