Although ETFs are generally regarded as lower-risk investments, particularly over the medium to long term, they are still based on shares or securities, with the inherent risks of trading on any securities exchange.
The value of ETF securities will rise and fall according to market changes. As with unit trusts and most investment vehicles, your capital is not protected in an ETF. Therefore, depending on market movements during your investment period, you are not guaranteed to get back your full investment when you decide to sell.
Particular risks include:
- General market risks
- Interest rate risks
- Exchange rate risks
- Inflationary risks
- Liquidity risks
- Legal and regulatory risks