ETF(Exchange-TradedFund) is a popular investment fund at present, and it is a financial tool that enables ordinary investors to obtain greater investment income with a lower threshold. However, ETF funds also have risks, and investors should carefully evaluate the size of the risks when choosing ETF funds. This paper will analyze the risks of ETF funds from multiple angles.

I. structural risk

the structure of p>ETF funds determines that there are certain structural risks. ETF funds adopt the mode of "indexed investment", that is, the investment funds are purchased according to the stock proportion of an index, thus realizing the investment in the tracking index. However, in the case of large market fluctuations and frequent index changes, ETF funds also have tracking errors, that is, the performance of ETF funds is not exactly the same as the tracked index. In this case, investors may lose the expected return on investment.

second, market risk

the performance of ETF funds will be affected by the market, and market uncertainty will also fluctuate the performance of ETF funds. Market risk is unpredictable, which may lead to a decline in the net value of ETF funds. At this time, investors' assets may be affected by market risks and need to bear the risk of capital loss.

iii. Liquidity risk

The liquidity of p>ETF funds can affect the investment risk of investors. In some inactive markets, investors may face trading losses because of the small trading volume of ETF funds, and large transactions may affect market prices and reduce ETF liquidity. In addition, whether the ETF fund has the participation of arbitrageurs has a great influence on the secondary market price of ETF funds. In the case of insufficient liquidity of ETF funds and lack of arbitrageurs, investors also need to bear increased risks.

iv. Selection risk

There are also selection risks in p>ETF investment. There are many kinds of ETF funds, so investors need to choose their own target funds. In the process of selecting ETF funds, we need to pay attention to many factors, including index selection, management rate, fund annual performance and so on. However, due to too many funds and complicated information, it is easy to have information asymmetry and make it difficult to choose. If the fund's ability to bear personal risks exceeds its own ability, it will have adverse effects.

v. managing risks

the management ability of ETF fund managers also has an impact on the investment performance of ETF funds. Managers need to have certain index judgment ability, asset allocation strategy and risk control ability, so that ETF funds can maintain a relatively stable performance level in the case of large fluctuations in asset values. However, if the ability of ETF fund managers is insufficient, it may have an unstable impact on the performance of the fund.

to sum up, the risks of ETF funds mainly include structural risk, market risk, liquidity risk, selection risk and management risk. Investment in ETF funds needs to be evaluated according to their own risk tolerance, choose the right fund varieties, pay attention to asset diversification, and adjust and manage the portfolio in time. In the end, it is the key to success to keep cautious and steady investment and control the risk of ETF funds.