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Hi Paul,
ETFs seem to be very popular at the moment for personal investors & SMSFs.
My question is what happens if we have a crash? Looking at the ETFs on the Aust market, there are only a few buyers & seller. So if everyone is trying to sell, will I be able to get my money out?
A: Exchange Traded Funds (ETFs) appoint market makers to provide tight bid/offer spreads around the underlying NTA (net tangible asset value). If they are net buyers, they redeem the units with the issuer – if they are net sellers, they create units with the issuer. Look at the quality of the spread rather than the number of buyers or sellers.
If you are investing in a traditional ETF that tracks a major index such as the S&P/ASX 200 or US S&P500 (rather than a synthetic ETF), yes, you will be able to get your money out.
regards
