I am considering investing in ETFs, mostly to learn, and without any formal financial education. If this matters for the question, I am French living in France.

I started to read about ETFs and found a long list of "recommended" brokers (Interactive Brokers, Trade Republic, Degiro, ...). All of them offer the ETFs I am interested in (the very basic ones such as iShares Core MSCI World UCITS ETF, iShares Global Clean Energy UCITS ETF, ...)

I understand of course that the market is volatile and that I can lose what I invest because of that market. I would like to understand to which extent I own what I invested in.

Specifically, If I invest in an ETF, do I have ownership on that ETF (similar to how I can own shares), or is it just an instrument that belongs to (either the manager or the broker)?

Even more specifically, say the following happens - would I still own the ETF?

  • the Issuer (iShares/BlackRock for instance) goes bankrupt
  • the Broker (Trade Republic for instance) goes bankrupt

The reason for my question is that I would like to understand if the choice of a broker should be driven exclusively by their costs (how much will it cost me to buy 1 EFT, and then how much will it cost me to sell 1 EFT) and possibly the comfort of their interface/payment means/ ..., or whether I should also worry about their long term existence? (because if they go down, so go my investments)

Note: I would like to highlight that I understand the market risk (at least I know that I can lose and gain and that it goes in waves, and that the past is not an indication of the future, etc.) but worry about the intermediates.

  • There is probably an existing question which covers how ETFs work. I should double-check that myself, since I still don't understand what makes them more interesting (to some people) than traditional mutual funds.
    – keshlam
    Jan 1, 2023 at 13:17
  • @keshlam: I "know" how ETFs work (in the sense of what they are), I was wondering about the exact place they are stored (and the owner) once I purchase some. We do have mutual funds in France (called PEA) and I am also investigating them.
    – WoJ
    Jan 1, 2023 at 13:37
  • The answer should be the same as for other market-traded securities when you go through a broker. If you buy a share, you own that share, unless you make other arrangements. I haven't had reason to investigate exactly where the ownership is recorded, so I'm curious about that too.
    – keshlam
    Jan 1, 2023 at 14:42
  • @keshlam - The main advantages of ETFs over mutual funds: Lower expenses, they trade all day, greater tax efficiency Jan 1, 2023 at 17:55
  • Thanks. Since I don't "trade" or try to time the market, time-of-day honestly doesn't matter to me. Since I'm using extremely low-fee index funds, and dealing directly with the investment bank, my expenses are already minimal. Tax efficiency is a point worth looking at, though.
    – keshlam
    Jan 1, 2023 at 20:22

1 Answer 1


An ETF is a basket of securities that trades on an exchange just like a stock does. If you buy these, the shares go into your brokerage account just like buying shares of stock do (all are in street name).

The purchase and sale cost will be whatever commission your broker charges per transaction.

If the broker goes bankrupt and you are using a US based broker, they are covered by SIPC insurance which achieves recovery. SIPC insurance does not cover loss of share value.

  • Thank you. When you write "(...) covered by SIPC insurance which achieves recovery. SIPC insurance does not cover loss of share value." do you mean that the insurance would get me the ETF shares back, numerically speaking? Not sure what "loss of share value is" (do you mean its money value - but this is a given, right, since these are volatile shares anyway (i.e. they follow the market))
    – WoJ
    Jan 1, 2023 at 18:16
  • @Woj - Suppose you own 100 shares of the ETF and it is $100 when the broker goes under and it is $90 by the time SIPC recovers your shares. You get your100 shares back but the loss incurrred is yours to bear. Jan 1, 2023 at 18:46

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