An exchange-traded fund (ETF) that faithfully tracks the performance of a market index without leverage (gearing). In other words, if the market index moves up by 1%, the fund will increase in value by 1% and vice versa. This perfect correlation reflects a delta value of one (1). This means sensitivity to the market index is one-to-one. However, and unlike other delta one products, ETFs are subject to deviation from the benchmark, i.e., the so-called tracking error. In active markets, ETFs should have minor tracking error. In less active markets, the error is likely to increase.