Risks of trading ETFs
The main risks associated with trading exchange-traded funds
- Market risk: ETFs are subject to market risk, meaning their value may fluctuate due to changes in the market or the underlying securities
- Credit risk: ETFs investing in bonds or fixed income securities face credit risk, where the issuer may default on debt obligations
- Interest rate risk: ETFs investing in fixed income securities are subject to interest rate risk
- Liquidity risk: ETFs may be less liquid than individual stocks, especially those tracking obscure or specialised markets, making it harder to buy or sell them in large quantities
Management risk: actively managed ETFs are subject to management risk, where the fund manager's decisions may not be successful, leading to lower returnsTracking error risk: there can be differences between the ETF's performance and its underlying index or benchmark
Other risks associated with trading exchange-traded funds
Investing in foreign equities involves additional risks such as political, economic, legal risks, and currency exchange rate fluctuations.
More about the risks
ETFs provide higher diversification than single stocks, but this doesn’t guarantee profit or protect against losses in declining markets. Replicating the benchmark doesn’t ensure profits and may result in losses if the benchmark underperforms. Past performance isn’t indicative of future returns.
The above information is for general purposes only and doesn’t constitute financial advice. For personalised advice, seek professional and independent guidance. Revolut is not a financial advisor.
Do Swiss customers have access to investment services?
Investment services are provided by Revolut Securities Europe UAB and are available to all Swiss Revolut customers who already have a retail account set up with Revolut Bank UAB. Availability depends on the Revolut entity you're registered with. For more information, read this FAQ.