I understand that there are different ways to manage an ETF. Some use physical replication where they seem to buy the actual stock to track the index it is following. Others use synthetic replication where they use options or swaps to do more or less the same.
I am interested in investing in ETFs, but I was wondering is there a difference in risk between the ETFs which use either physical or synthetic replication?
I can imagine that a 'plain' physical replication holds less risk then an ETF which uses other means.