ETF is a common index fund. It constructs a portfolio according to the types and weights of index constituent stocks, thus tracking the index and realizing the investment in the index. So, is the index fund ETF safe?

Is index fund ETF safe?

The index fund ETF is risky, and the probability of principal loss is high, but its fluctuation is smaller than that of investment stocks. ETF, an index fund, builds a portfolio according to the types and weights of index constituent stocks, which is essentially a stock portfolio and needs to bear the risks of stocks. However, compared with individual stocks, index fund ETF spreads risks by spreading funds, so the risk is lower than that of individual stocks.

Different types of index funds ETF face different risks, which mainly depends on the different index targets. Generally speaking, the risks of broad-based index funds are lower than those of narrow-based index funds, blue-chip index funds are lower than those of small and medium-sized index funds, and value index funds are lower than those of growth index funds.