What are the risks of buying an ETF?
1, market fluctuation risk
The risk of market fluctuation caused by policy changes, interest rate adjustments and other factors is generally not considered by investors. Investors are advised to do a good job in market research when investing and observe market changes at any time. However, appropriate market volatility is conducive to investment.
2. Risk of tracking error
ETF funds mainly determine returns according to index changes. If the fund's net value deviates significantly from the index due to some factors, it may lose money. Therefore, investing in ETF foundation has the risk of making mistakes.
3. High purchase risk
Buying at a high level may lead to losses. When investing in ETF funds, investors are advised to make a valuation, and underestimating buying is more secure.
4. Economic risks
I often hear that "buying an index means buying national wealth". Investing in ETF funds is closely related to the national economic development. If the economy develops well, it is more likely to invest in funds.
5. Liquidity risk
It mainly refers to the decrease of funds and trading volume due to the large-scale selling of funds, which leads to the increase of liquidity risk.
What are the precautions?
1, liquidity
Generally, funds with higher liquidity are more convenient to invest and can be bought or sold better. Liquidity includes turnover rate and on-site turnover. The higher the turnover rate, the better the liquidity. The smaller the trading volume, the higher the transaction cost.
2. Exponential error
The performance of ETF funds mainly depends on the index. The smaller the error, the more stable the fund, the better the development prospect and the greater the possibility of profit. On the contrary, you may lose money.
3. Sharing in different places
If the off-exchange share is restricted in the course of trading, it will lead to the discount or premium trading of the on-exchange trading price and increase the trading risk.