Many ETFs are designed to provide a exposure to a particular benchmark.
The benchmark determines how their performance is judged, typically by an index (e.g. the S&P 500 index)
An ETF can be active or passive. Passive ETFs aim to track their stated benchmark to deliver a similar return.
Active ETFs, on the other hand, are managed by an investment team trying to outperform a stated benchmark.
Generally, passive ETFs have lower fees than active ETFs. This is because passive ETFs have a more “hand off” approach to investing.
With active ETFs, a higher fee pays for the manager to choose investments and trade more frequently