As with other securities, exchange-traded funds are also exposed to general market and exchange rate risks. As ETFs track an index, they perform almost identically to the underlying stock-exchange barometer. If political or social developments have a major impact on the economy and financial markets, this will also affect your ETF. The default risk of the additional third party also comes into play with synthetic ETFs. There are also complex products on the ETF market, such as leveraged ETFs or smart beta ETFs which are less transparent.
ETFs are exciting alternatives to traditional, actively managed funds. They are suitable for any portfolio and ideal for new investors. A vast range of products exists.