Is it true an entire ETF could go bankrupt and all money tied to it goes to zero?
I have a relative who swears an ETF just like an individual stock could go belly up and all money in it could be lost. I told them this is not possible unless every single stock in that ETF was to go to zero. The example was JEPI (which pays a nice dividend). I have money in JEPI to give me a check (pays monthly dividends). My relative told me JEPI could go to zero overnight. I told them no it cannot because it is made up of very many stocks. Who is wrong and who is right? $ARK Innovation ETF(ARKK.US$ $Direxion Daily Semiconductor Bull 3x Shares ETF(SOXL.US$ $Nasdaq Composite Index(.IXIC.US$
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New York City : I think it all depend on the type of ETF. For the type which are synthetic replication, there might be possibility of go to zero. Those that having derivatives as underlying assets are at high risk. E.g. those which are 2x, 3x ETF should be using derivatives.
102872488 : etf fund manager go broke?
amiable New York City: Yes, it all depends on what kind of ETF the retail investor buys. If they choose high-risk and high-return ones, there is a real risk of clearing up, but this possibility is very small