Not all exchange-traded funds (ETFs) are created equal, research house van Eyk concluded after a review of nine Australian share products.

Van Eyk found only two ETFs that were worth recommending, while only one ETF received the highest rating, AA.

The research house gave the SPDR S&P/ASX 200 an 'AA' rating, while it rated the iShares MSCI Australia 200 ETF 'A'.

The research house's Australian Shares ETF Review 2011 is the first comprehensive product review. It covered three broad-cap, two large-cap, one small-cap, and three high dividend-income ETFs.

"Our approach has revealed a number of diverging characteristics across what many may consider similar ETF strategies," van Eyk lead analyst James Armstrong said.

"In particular, differing bid-ask spreads, net asset value premium/discounts and degrees of overall liquidity were evident."

"These features can result in investment costs that are significantly different from what could be assumed based on only the stated management fee. There are also various structures, strategies and index methodologies that result in significantly different levels of expected tax efficiency," he said.

Armstrong also found that income ETFs struggled to provide an overall competitive product.

The problem here is that income focused strategies generally require higher degrees of flexibility which index driven strategies can rarely provide, Armstrong.

While the income-focused benchmark indices are customised and driven by fundamental factors, they may not provide the flexibility to avoid certain common investment traps, he said.