An exchange traded fund (ETF), specifically a swap exchange traded fund (swap ETF), that replicates its index with a fully funded swap (FFS). Under the fully funded swap, the swap counterparty collects collateral (from the investor) and deposits it with an independent trustee. The trustee is entrusted with holding the collateral on behalf of the fund.

The swap constitutes an over-the-counter (OTC) financial derivative instrument (structured as a swap) under which the investor makes a single payment at inception of the transaction and receives, from the counterparty of the swap, a single or multiple payments linked to the performance of an underlying asset. The ETF is is required to deliver the return on the collateral it holds to the swap counterparty, while receiving the performance of the index, in exchange. Under this structure, the ETF transfers its sale proceeds to the swap counterparty, which then purchases a pool of collateral to be deposited with a third party trustee/ custodian.