What are the risks involved in ETF investments?

Here are some of the potential risks that come with investing in ETFs.

• Market risk: ETFs, like all investments in markets, are subject to market risks. However, diversifying across markets and sectors can help reduce this risk.
• Bid-Ask Spread A spread is the difference between the ask price (lowest price that a seller will accept) and the bid price (highest price buyer is willing pay for a share). This spread can vary from one ETF or another. This is negated by higher liquidity
• Index Tracking Error: Index Index ETFs track a specific index as its underlying. Due to the cash component in the portfolio, the ETF's returns can be lower than or higher than that of the underlying ETF.