A.I.M. Users Bulletin Board

[ls7550]

An ETF is guaranteed by the company issuing it. It can and will go to zero if that company fails.

In concept that's for ETN's, not ETF's. Theoretically if a ETF company failed the liquidators would liquidate the stock held and return the proceeds to the shareholders. They're structured products - a medium that holds shares in a range of stocks on behalf of the shareholders. They don't own those shares, so if their company fails there's no claim available to those shares by the debtor.

ETN's are debt instruments, do not own anything and if the company goes bust, you lose out.

It's become increasingly subjective however, as some (more complex) ETF's are more like ETN's and/or might be employing tactics that expose investors to greater risk (potential fraud etc). For the more 'normal' ETF's however (collections of stocks) such as those that most around here might be AIM'ing, they're safe from issuing company failure risk.