In 2025, U.S. spot Bitcoin ETFs alone attracted more than USD 2 billion in just two days, while flagship fund IBIT surpassed USD 80 billion in assets within 374 days—setting a global growth record for ETFs. Spot Ethereum ETFs also logged their largest single-day net inflow this month. From crypto assets to gold and energy-transition metals, spot ETFs have become a magnet for global capital.

So what exactly is a spot ETF? How does it differ from a futures ETF? And what should retail investors watch out for? Read on for a comprehensive overview.

What Is a Spot ETF?

A spot (or “physical”) ETF is an exchange-traded fund that holds the underlying asset directly—whether Bitcoin, gold, carbon credits, copper, and so on. Each ETF share represents a pro-rata claim on assets kept with a qualified custodian, producing a “one-share, one-unit” structure whose price closely tracks the spot market. For crypto spot ETFs, issuers must partner with regulated custodians to secure private keys and file daily asset reports, enabling traditional brokerage accounts to obtain true crypto exposure.

Spot vs. Futures: Why the Difference Matters

1. Underlying Exposure

Spot ETFs hold the physical asset or 1-for-1 depositary receipts, so tracking error is driven mainly by the management fee. Futures ETFs hold CME and other exchange contracts and must roll them periodically; in contango or backwardation, the roll can widen the gap versus spot prices.

2. Cost and Tracking Error

Futures ETFs incur extra trading, margin, and financing costs due to frequent contract rolls, resulting in higher all-in expenses. Spot ETFs require only custodial fees after initial purchase, making long-term holding cheaper and closer to the index.

3. Investment Use-Cases

Spot ETFs suit medium-to-long-term allocation aimed at tight tracking of the underlying; futures ETFs, offering swaps, leverage, and arbitrage opportunities, are more often used for short-term trading or institutional hedging.

Investing in Spot ETFs: Pros and Cons

Opportunities. Spot ETFs have a low entry threshold and high liquidity: standard brokerage accounts allow T+0 intraday trading, at costs well below buying physical assets or using OTC desks. Daily disclosure of holdings and NAV adds transparency, and some jurisdictions grant capital-gains tax deferral for ETF sub-accounts.

Risks. Underlying assets can be highly volatile—Bitcoin’s intraday swings often reach double digits, and ETF prices amplify those moves. While ETF structures reduce individual private-key risk, investors must still monitor custodian credit events; shifts in policy or taxation can also trigger rapid outflows.

Tips. Define whether the spot ETF is a strategic holding or a tactical trade before setting position size and exit rules. Pay close attention to fees and AUM: flagship products tend to be cheaper and more liquid, while very small ETFs risk liquidation. Blending spot ETFs with stocks, bonds, or commodity ETFs can improve portfolio Sharpe ratios thanks to low correlations.

How to Buy an ETF on uSMART

After logging into the uSMART HK APP, tap “Market” at the top of the screen to find the ETF you want, or tap the search icon at the upper-right corner and enter the ticker code. On the details page you can review price history and other data; tap “Trade” at the lower-right, choose “Buy” or “Sell,” fill in your order parameters, and submit.