I bought some index based ETF's recently. (Oops!)
But the recent decrease in the price of shares was not worrying me all that much because it is meant to be a long term investment (15 years or more) and if the market has not picked up by then I am not sure I will need the money anyway.
I bought whole market index ETF to be secure. I understood I was investing in the whole index. So even if a few companies go bankcrupt, the ETF should be fine, because I have invested in a couple of hundred companies. I have "spread".
But then I got to thinking....
What if the financial firm that sold me the ETF goes bankrupt?
Is the ETF only as safe as the company that sold me the ETF?
If so then in the present financial climate where investment banks are going bankrupt, my ETF does not seem like a secure investment. I might have been, or be, better off spreading my assets myself.
My question is, are ETF's only as secure as the firm that is selling them, or are they as secure as the market segement/index which the represent?