Index funds have a variety of ways to replicate the index beyond physical replication, including options, buying "similar things", sampling etc..
So yeah, they don't really need to stick to 100% of the presented issue.
Index funds and ETFs also have strict replication rules limiting the amount of non-physical replication in their legally binding prospectus...
The more physical a tracker is, the lower the tracking error, but also the more fees you have to pay. "Good" ETFs/IFs are often 98% physical. This makes for higher fees, but more safety for subscribers in case of large swings.
So it's not like they are _free_ to replicate however they see fit, the replication mechanism is part of the product.
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