Are ETFs guaranteed or insured?
There seems to be little risk of abuse of the ETF structure as an investment vehicle. In the U.S., the SEC thoroughly examines any application to create an ETF, and only large and closely watched firms are allowed to create and redeem ETF certificates. Finally, the same government agency (the Depository Trust Clearing Corporation) that ensures that individual stock certificates end up in the right investor’s hands after a trade also ensures the ETF certificates are assigned correctly in a trade. In a decade of trading billions of dollars worth of ETFs, to our knowledge no US investor has ever lost money from fraudulent ETFs. The risk of the underlying asset is quite another matter. Each asset class must be examined separately, and risk profiles of assets may change over time. CycleETF can not guarantee or insure any risk one might assume in trading our recommendations.
There seems to be little risk of abuse of the ETF structure as an investment vehicle. In the US the Securities Exchange Commission thoroughly examines any application to create an ETF, and only large and closely watched firms are allowed in on the creation and redemption process of an ETF certificate. Finally, the same government agency (the Depository Trust Clearing Corporation) that ensures that individual stock certificates end up in the right investor’s hands after a trade also ensures the ETF certificates are assigned correctly in a trade. In a decade of trading billions of dollars worth of ETFs, to our knowledge no US investor has ever lost money from fraudulent ETFs. The risk of the underlying asset is quite another matter. Each asset class must be examined separately, and risk profiles of assets may change over time. Stocks are clearly risky, and ones in technology or emerging markets particularly so. Long-term bonds and real estate are also risky in their own way. Short-term i
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- Are ETFs guaranteed or insured?
