Can ETF become Zero?

Can ETF become Zero ?
I got NSE ETF from below page ,
https://www.nseindia.com/market-data/exchange-traded-funds-etf
I see some stocks are getting delisted on which retail investors are receiving Rs. 0.
will it happen on ETF ? if Yes, what is the best way to avoid ?

Can Someone please help on my query ?

ETFs mimic a particular index and hold securities in the same weight as the index. If the prices of all the securities go to 0 (which in turn means that the index value would also go to 0), then yes the ETF should technically have a NAV of 0.

Why not.

If people in India start fighting each other we will reach that target quickly.

I respect everyone’s answer here. But I don’t think that the value of an ETF can ever be zero or negative because their values keep resetting daily. It is unlikely for its asset to go up 100% in a single day and so, an ETF can’t become zero.

An ETF follows a particular index and the securities are present at the same weight in it. So, it can be zero when all the securities go to zero.

Short answer ‘Practically Impossible’

1 Like

If for some reason Nifty crashes 30-40% in a day then ETFs based on it will likely fall lot more, because ETFs prices are decided by trades and not exactly mimic Nifty 50 prices. In a market like India ETFs doesn’t have lot of liquidity, just look at ugly chart of NiftyBees.

Not exactly if there is premium or discount market makers would buy sell redeem and create new units. Usually 1 or 2 days at maximum that price might seem deviating from index. Tracking error is there both in ETF and index mutual fund.

If there illiquidity then you can contact AMC and redeem the units or sell to them. There was a detailed post here in trading qna about redeeming ETF units

What’s ugly in that ? Kindly explain.

Kindly go and check the facts.
30-40% in a day?