This ETF is Rated R

There’s been a flurry of articles about the dangers of exchange-traded funds. BlackRock Inc.'s Larry Fink said leveraged ETFs could “blow up” the industry, even though they have microscopic assets and own less than 0.02 percent of the derivatives market. There’s also been chatter about potential problems with ETFs that track illiquid assets, such as senior loans, if there's a run for the exits. A recent Ventured & Gained post looked at exchange-traded notes (ETNs) and some risks they pose.

While there's no real evidence that ETFs pose a systemic risk, they can hold some pretty exotic stuff. And just because they trade like stocks, that doesn’t mean they're all as liquid or straightforward as stocks. Perhaps the unique dangers of some ETFs should be flagged more prominently.