All investments carry risk, and ETFs are no exception. Key risks to be aware of include:
- Market risk: The value of your ETF investment can fall as well as rise, depending on the performance of the underlying assets. You could lose some or all of your invested capital.
- Concentration risk: If you invest in a single ETF focused on a specific sector or region, your portfolio may be more exposed to downturns in that area compared to a broadly diversified portfolio.
- Currency risk: If the ETF holds assets denominated in a currency other than euro, exchange rate movements could affect your returns.
- Liquidity risk: In unusual market conditions, it may be harder to buy or sell ETF shares at your expected price.
- Tracking error: An ETF may not perfectly replicate the performance of its benchmark index due to costs, timing differences, or other factors.
ETFs are regulated financial instruments and provide a level of transparency and investor protection not always available with other investment types. However, they do not eliminate market risk. Always invest in line with your financial goals, risk tolerance, and time horizon, and only invest money you can afford to lose.
See Risk disclosure for more information.