Not all ETFs are simple trackers. Synthetic ETFs are exploding in number and entail counter-party risks and collateral risks that investors need to understand.
The Accumulator
ETFs have been cited by global regulators as a potential threat to the global financial system. It’s time for a level-headed view on what action can be taken.
Even plain vanilla ETFs may be exposed to counterparty risk as a consequence of extensive security lending activities.
Rapid growth and financial engineering of synthetic ETFs has created a cocktail of poorly understood emerging risks for investors and global markets warn reports from the IMF and others.