Fund structure for comparison shoppers (advanced)
Two ETFs tracking the exact same index, from two different issuers, are not automatically the same investment wearing a different label — a handful of structural choices can genuinely differ underneath matching names.
Same index, different fund — what can actually differ
Two ETFs tracking the same published index from two different issuers are answering the same question — "copy this list" — but the fund wrapper around that answer can genuinely differ: how it’s built ( How the fund copies its index: by buying the shares directly (physical) or using a swap contract (synthetic). More → ), which specific variant you’re buying (share class), and where it’s legally based ( The country where the fund is legally based, which affects its tax treatment and rules. More → ). None of these show up in the fund’s name, and none of them are captured by comparing TER alone.
Replication and counterparty: the swap question, one level deeper
One level past the beginner The fund actually buys every share in the index it tracks (full replication). More → -vs- The fund uses a swap contract with a bank to mirror the index, instead of holding the shares directly. More → split: for a synthetic fund specifically, worth checking how many swap counterparty banks it uses (a fund spread across several is generally considered sturdier than one relying on a single counterparty) and what collateral backs the swap. This is disclosed in the fund’s own documents — it’s a real structural difference between two funds that both call themselves "synthetic", not just a single yes/no label.
Share classes: currency-hedged, accumulating/distributing, and why they're not new funds
A currency-hedged version, a distributing version, and an accumulating version of the same underlying fund are share classes — variants of one fund with the same holdings underneath, not separate funds competing on merit. Comparing a hedged share class’s return against an unhedged one and concluding the hedged version "performed better" is comparing two different currency bets, not two different funds' skill. When two issuers' funds look near-identical, check you’re actually comparing the same share-class type on both sides before reading anything into a return gap.
Domicile and withholding tax: the quiet return-driver
A fund’s The country where the fund is legally based, which affects its tax treatment and rules. More → sets which tax treaties apply to the dividends it receives from the companies it holds — and those treaties genuinely differ between, say, Ireland and Luxembourg, which can create a small, persistent difference in the dividends actually retained by two funds tracking the identical index. It’s usually a minor effect next to the headline fee, but it’s a real structural driver worth knowing exists rather than assuming two funds domiciled differently are otherwise identical.
A practical comparison checklist
Before treating two near-identical funds as interchangeable: same replication method, and if both synthetic, a look at counterparty diversification; the same share-class type on both sides (hedged/unhedged, accumulating/distributing); and domicile, as a minor but real factor in what dividends the fund actually keeps. None of this replaces comparing cost and tracking difference — it’s the layer underneath those headline numbers that explains why two "identical" funds sometimes aren’t.