Exchange-Traded-Funds, smart beta products, and many index-based vehicles are composite securities (CSs) facilitating trading systematic factors through reducing investors' duplicated costs in trading multiple securities. We analytically show that CS designers in competition optimally select liquid underlying assets representative of the factors, which ETF data corroborates. CS trading entails investors' active decisions, and impounds more systematic information into prices. The rise of CSs creates greater informational efficiency, price variability, and co-movements in the underlying asset markets, as well as potentially heterogeneous effects on liquidity and asset-specific information acquisition/incorporation, all consistent with extant (and often mixed) empirical observations.