Futures-based Exchange-Traded Funds (ETFs) use derivatives–specifically futures contracts–to gain exposure to an underlying asset such as commodities, currencies, or indexes. Unlike spot ETFs, which hold the actual asset, futures ETFs hold paper contracts tied to the asset’s price. This design can provide access to certain markets but also introduces additional risks–such as leverage, tracking error, and higher costs–that investors should fully understand before considering them. How Futures ETFs Generate Distributions Unlike equity ETFs that pay traditional dividends, futures ETFs generate distributions primarily from: Realized Gains/Losses from Futures Trading: Profits or losses from trading futures contracts, which are settled or rolled over periodically. Interest Income on Collateral and Cash Positions: Income from short-term instruments like U.S. Treasuries held as collateral for futures contracts. Other Net Investment Income: Additional income after accounting for fund expenses, such as management fees. Due to the nature of futures markets, distributions can be volatile and are heavily influenced by market dynamics, making futures ETFs distinct from other asset classes. Key Drivers Behind Futures ETF Distributions Several factors influence the distributions of futures ETFs: Futures Roll Yield / Market Structure Futures ETFs