Global index ETF or fund risk?

kerrick

Considering large assets / liquidity global index trackers, major fund managers Blackrock, Fidelity, Xtrackers, Vanguard etc.

Of course the assets are ringfenced, the risk is very low, and you can split holdings between platforms and fund managers etc. etc. But as FCA compensation is capped, in terms of potential systemic risk, is holding an ETF more risky than holding a fund? 

Or not worth considering on the basis of systemic risk?

dunstonh

 But as FCA compensation is capped, in terms of potential systemic risk, is holding an ETF more risky than holding a fund? 

The FCA provides no compensation.    The compensation scheme is from the FSCS.  

ETFs do not get FSCS protection.  So, by default, ETFs are higher risk than the equivalent UT/OEIC that does get FSCS protection.   However, the protection is not comparable to deposit protection but some may feel it is important.

wmb194

kerrick said:

Considering large assets / liquidity global index trackers, major fund managers Blackrock, Fidelity, Xtrackers, Vanguard etc.

Of course the assets are ringfenced, the risk is very low, and you can split holdings between platforms and fund managers etc. etc. But as FCA compensation is capped, in terms of potential systemic risk, is holding an ETF more risky than holding a fund? 

Or not worth considering on the basis of systemic risk?

Most ETFs are domiciled abroad, most commonly in Ireland and Luxembourg, so whatever protections or lack therof those jurisdictions supply are more relevant than Britain's.

Albermarle

kerrick said:

Considering large assets / liquidity global index trackers, major fund managers Blackrock, Fidelity, Xtrackers, Vanguard etc.

Of course the assets are ringfenced, the risk is very low, and you can split holdings between platforms and fund managers etc. etc. But as FCA compensation is capped, in terms of potential systemic risk, is holding an ETF more risky than holding a fund? 

Or not worth considering on the basis of systemic risk?

Many rather exotic ETF's have sprung up following all sorts of indexes and markets. In these cases I might be a bit concerned, but if you are talking about mainstream ETF's with Vanguard, Fidelity etc then the risk must be miniscule. Unless there was a global nuclear war and then you would not be worrying about ETF's anyway.