Has an ETF ever gone to zero?

No, it would not drop to zero. It would be liquidated, and the investors would get the NAV of their shares. Presumably it depends how the ETF gains exposure to the underlying assets, E.g. by buying the assets or synthetically.

Over even longer time horizons, every percentile (except the 100th) of the ETF's value will eventually converge to zero. This is not to say that rebalancing is always bad. Rebalancing a portfolio with positive expected growth will enhance median returns over time.

Leveraged ETF prices tend to decay over time, and triple leverage will tend to decay at a faster rate than 2x leverage. As a result, they can tend toward zero.

Interest rate changes are the primary culprit when bond exchange-traded funds (ETFs) lose value. As interest rates rise, the prices of existing bonds fall, which impacts the value of the ETFs holding these assets.

But can a leveraged ETF go negative? No. If you own a leveraged ETF you can't lose more than your initial investment amount. You would never be liable for more than you invested; in a sense, the amount you could lose is capped.

Because of their wide array of holdings, ETFs provide the benefits of diversification, including lower risk and less volatility, which often makes a fund safer to own than an individual stock. An ETF's return depends on what it's invested in.

from my understanding, it doesn't seem like SPY could ever go to 0 since it tracks/mirrors the S&P 500. Or if it did, there are greater things than money to be worried about because the entire economic system has probably collapsed if that happens since the biggest companies will always have some value.

ETFs are considered to be low-risk investments because they are low-cost and hold a basket of stocks or other securities, increasing diversification. For most individual investors, ETFs represent an ideal type of asset with which to build a diversified portfolio.

Are ETFs safer than stocks? ETFs are baskets of stocks or securities, but although this means that they are generally well diversified, there are ETFs that invest in very risky sectors or employ higher-risk strategies, such as leverage.

Vanguard is paid by the funds to provide administration and other services. If Vanguard ever did go bankrupt, the funds would not be affected and would simply hire another firm to provide these services.

The one time it's okay to choose a single investment

That's because your investment gives you access to the broad stock market. Meanwhile, if you only invest in S&P 500 ETFs, you won't beat the broad market. Rather, you can expect your portfolio's performance to be in line with that of the broad market.

You can lose money investing in mutual funds or ETFs. , so don't be dazzled by last year's high returns. But past performance can help you assess a fund's volatility over time. returns.

If an ETF still has large trading volumes, a price that isn't moving radically up and down with each new trade, and fairly small bid-ask spreads (see the next section), then the market price is likely a better indicator of portfolio's true value than the NAV, and it is safe to proceed with a trade.

Investing now with ETFs may save you a lot in future. ETFs are generally lower in cost than other investment options. One of the costs with ETFs is the transaction fee – the cost of buying the ETF. In the long run, these savings can make a huge difference².

One isn't safer than the other. It all depends on what the fund owns. For example, an ETF invested in emerging markets would normally be considered riskier than one investing in developed markets, like the US. Or an index fund holding stocks might be considered riskier than one holding bonds.

While there are few certainties in the financial world, there's virtually no chance that an index fund will ever lose all of its value. One reason for this is that most index funds are highly diversified. They buy and hold identical weights of each stock in an index, such as the S&P 500.

The historical average yearly return of the S&P 500 is 12.0.78% over the last 10 years, as of the end of September 2023. This assumes dividends are reinvested. Adjusted for inflation, the 10-year average stock market return (including dividends) is 9.066%.

If you have limited choices in a retirement plan and SPY is the only S&P 500 ETF offered, go for it. You will very likely outperform most other large cap ETFs over the long term without ever needing to buy or sell, as the top holdings in your ETF always will be the stocks most popular with investors.

When an ETF liquidates, investors generally receive cash distributions equal to NAV, so even if you fall asleep at the wheel, you will receive the fair value of your shares—most of the time. It's worth noting, however, that there have been instances where the process wasn't smooth.

The largest Aggressive ETF is the iShares Core Aggressive Allocation ETF AOA with $1.69B in assets. In the last trailing year, the best-performing Aggressive ETF was AOA at 7.30%. The most recent ETF launched in the Aggressive space was the Cabana Target Leading Sector Aggressive ETF CLSA on 07/12/21.

ETF investing comes with less control because investors don't select the individual assets in the fund. Instead, an expert does the work. However, individuals looking to avoid a particular company, sector, industry, or type of asset may prefer another investing strategy with a more hands-on approach.

Market risk

The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.

When it comes to building an ETF portfolio, fewer can be better. Holding too many ETFs in your portfolio introduces inefficiencies that in the long term will have a detrimental impact on the risk/reward profile of your portfolio.

In terms of safety, neither the mutual fund nor the ETF is safer than the other due to its structure. Safety is determined by what the fund itself owns. Stocks are usually riskier than bonds, and corporate bonds come with somewhat more risk than U.S. government bonds.

Vanguard's mission is to "take a stand for all investors, to treat them fairly, and to give them the best chance for investment success."6 It prides itself on its stability, transparency, low costs, and risk management. It is a leader in offering passively managed mutual funds and ETFs.

Vanguard is the king of low-cost investing, making it ideal for buy-and-hold investors and retirement savers. But beginner investors and active traders will find the broker falls short despite its $0 stock trading commission, due to the lack of a strong trading platform and accessible educational resources.

When the market cratered, investors withdrew $16.4 billion from Vanguard's index mutual funds. What accounts for remaining index mutual fund outflows? Johnson says it could be clients pulling out money because they're retiring, or because they're negatively affected by the pandemic.