ETF protection / ring fencing / etc
Posted: September 10th, 2021, 6:56 pm
A while back I remember reading that there are various types of ETFs, some directly holding a basket shares ('physical') while others ('synthetic') use derivatives, etc, to attempt to replicate the funds aims. The latter often being considered more risky.
Personally I stick to the physical ETFs, but can't help feeling rather over exposed to ETFs issued by the same 'providers' (iShares and Vanguard).
How worried should I be about having a lot of money across multiple ETFs from the same provider?
I mean, an individual ETF trades like an individual company as far as buying and selling is concerned. And surely if one ETF is synthetic and another physical, from the same provider, does this imply there's some kind of legal separation of 'entity' between different ETFs from the same provider?
I'm thinking here mainly of the risk of fraud, or the ETF provider - Vanguard or iShares, etc - hitting trouble themselves.
Are individual ETFs operated separately, almost or even fully as separate companies? Or if e.g. iShares went bust, would iShares creditors have a claim on the funds within the whole range of iShares ETFs?
In essence, does having multiple ETFs from the same provider carry a higher risk of a catastrophe vs holding the equivalent ETFs from separate providers? Or is each ETF, even when marketed as being from the same provider, effectively just as separate and ring fenced as if it were from a different provider?
Can ETFs from the same provider share administrative staff? I'm thinking here, if someone on the inside were perpetrating a fraud within one ETF, is there a risk that the same person could be doing the same across multiple ETFs? Or would each ETF have their own staff, thereby limiting the risk from one fraudulent individual to one ETF?
If it makes a difference, I'm mainly interested in the iShares and Vanguard ETF structures, which I believe are all registered in Ireland.
Thanks.
Personally I stick to the physical ETFs, but can't help feeling rather over exposed to ETFs issued by the same 'providers' (iShares and Vanguard).
How worried should I be about having a lot of money across multiple ETFs from the same provider?
I mean, an individual ETF trades like an individual company as far as buying and selling is concerned. And surely if one ETF is synthetic and another physical, from the same provider, does this imply there's some kind of legal separation of 'entity' between different ETFs from the same provider?
I'm thinking here mainly of the risk of fraud, or the ETF provider - Vanguard or iShares, etc - hitting trouble themselves.
Are individual ETFs operated separately, almost or even fully as separate companies? Or if e.g. iShares went bust, would iShares creditors have a claim on the funds within the whole range of iShares ETFs?
In essence, does having multiple ETFs from the same provider carry a higher risk of a catastrophe vs holding the equivalent ETFs from separate providers? Or is each ETF, even when marketed as being from the same provider, effectively just as separate and ring fenced as if it were from a different provider?
Can ETFs from the same provider share administrative staff? I'm thinking here, if someone on the inside were perpetrating a fraud within one ETF, is there a risk that the same person could be doing the same across multiple ETFs? Or would each ETF have their own staff, thereby limiting the risk from one fraudulent individual to one ETF?
If it makes a difference, I'm mainly interested in the iShares and Vanguard ETF structures, which I believe are all registered in Ireland.
Thanks.