What is the biggest risk in ETF?
The biggest risk when investing in ETFs is market risk, the risk that the overall market, or the specific sector an ETF tracks, goes down in value. Since most ETFs passively follow an index, they rise and fall with the market. If the companies in the index lose value, so does your ETF.
This means that even though ETFs are diversified (which helps reduce company-specific risk), they can still lose value during broader market downturns. In other words, diversification doesn’t protect you from the risk of the entire market dropping, it just helps spread your risk more efficiently.
That’s why it’s important to invest with a long-term perspective. Market risk tends to smooth out over time, and historically, markets have recovered from downturns. At Easyvest, we build ETF portfolios designed to weather volatility, so you can stay focused on the bigger picture.
Last updated on 16/04/2025