4

I am thinking about investing my money in an ETF as they seem to be a relatively safe way to invest money over a long term (~20 years).

However, I don't like the "seem to be". Are there numbers on how many ETFs have been closed? How much money did investors lose? (Maybe grouped by type of ETF / by the index they tracked?)

  • 1
    "seem to be a relatively safe way to invest money over a long term ", are you asking about a fund going bankrupt, or are you worried about preservation of value? – mhoran_psprep Apr 23 at 10:13
  • I'm asking about both. I see going bankrupt as one extreme way of loss of value – Martin Thoma Apr 23 at 14:12
  • I think a better question is how likely is it that a large, well-run ETF closes. There are a lot of smaller ETFs for niche investing that are much more likely to close down, but if you are looking to invest in index ETFs then you probably don't care about those. – gaefan Apr 23 at 14:35
  • 2
    There are ETFs for all sorts of risky investment strategies. Knowing how many risky ETFs have closed doesn't address the relative safety of SPY or VOO. – quid Apr 23 at 15:12
3

There are several reasons why ETFs close:

  1. The issuer is in financial difficulty

  2. Assets under management are low

  3. The securities that comprise the ETF perform poorly

The ETF may liquidate or delist. If it liquidates, you'll receive cash distributions equal to the NAV less the liquidation cost. If it delists without liquidating the portfolio, it will trade trade OTC where it's likely to be far less liquid with much wider B/A spreads.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.