Question:

Could index ETFs have any special problems in a market crash?

by  |  earlier

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Besides those shared by the rest of the market and the modeled index. Thanks for your help!

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  1. ETFs may be more volatile than traditional mutual funds because they are exchange-traded like stocks, and thus more prone to panic selling.


  2. Low volume ETFs can move quickly in any panic selling (or buying).

    The market is not likely to crash. We have been in a Bear Market which is a long prolonged decline just like we had the last one in 200-2002. This one is worse because it is effecting (1)  the base wealth of Americans (real estate) and a global commodity (oil).

  3. Not really, they simply reperesent the market and therefore should pretty much correlate with it exactly on time scales of more than one day for even the most illiquid etfs.

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