I. Operational risks of fund companies
The operation of ETF needs to rely on the management ability of fund companies. If there are problems in the operation of fund companies, it may lead to the reduction of ETF assets and scale, which in turn will lead to the sinking and liquidation of ETF. The fund company is the issuer of ETF, and its sales ability, product specialty and operating experience are directly related to the quality of ETF. At the same time, the management level, personnel and technical level of fund companies also have an impact on the operation of ETF. Therefore, investors need to pay attention to the situation of fund companies when choosing ETFs, and avoid choosing ETFs with poor quality or management problems.
Second, market risk.
ETF is a fund that invests in financial products such as stocks and bonds, and its asset size, market trend and other factors will have an impact on the income level of ETF. When the market is depressed, the asset value of ETF may decrease, and some ETF products are small in scale. If the decline is serious, it is likely to be liquidated. In addition, when the prices of financial products such as stocks and bonds plummet, the assets of ETFs will also be affected. Therefore, investors should pay attention to market risks when buying ETFs, choose ETFs with good market prospects and large assets, and avoid choosing ETFs that are easily affected by market fluctuations.
Third, the management cost is too high.
The management cost of ETF is also one of the factors that affect whether it may fall into liquidation. Excessive management cost will lead to the decline of ETF income, thus reducing the market competitiveness of ETF. Management fee is to withdraw funds from ETF assets. With the increase of management fees, ETF assets may be reduced, and the scale may be reduced, even affecting the existence of ETFs. When investors choose ETFs, they need to choose ETFs with reasonable rates to reduce the operational risks of ETFs.
Fourthly, the design reason of ETF itself.
The design of ETF itself will also affect whether it may fall into liquidation. Some exchange-traded funds invest in changing markets. If the design of ETF is unreasonable or the strategy is outdated, the income level of ETF may be reduced, which may lead to liquidation. Therefore, investors need to pay attention to whether the design of ETF is reasonable and conforms to their own investment strategy when choosing ETF.
To sum up, whether ETF will fall into liquidation needs multi-angle analysis. The management risk, market risk, management cost and the design of ETF itself will all have an impact on whether ETF is liquidated. Therefore, when choosing an ETF, investors need to pay attention to the operating ability of the fund company, the asset scale of the ETF, the management cost and whether the design of the ETF is reasonable, so as to reduce the operational risk of the ETF.