There are some limited numbers of stock and bond indexes that the ETFs track. Investors want to invest in ETFs have to choose from the limited list which reduces their options for investments.
Some ETFs face low trading volume, where liquidity can be an issue for the investors and traders.
Investors are exposed to the same market risk as the stock market index.
Investors cannot invest in stocks which are not part of any popular index through the Exchange Traded Fund mechanism.
ETFs investing into the currency future may have extra foreign currency exchange risks.
Exchange Traded Funds (ETFs) are very popular in US and European countries and slowly are being popular in other developing countries as well. InIndia, Gold ETF has become very popular within one month of its launch and the investments in different ETFs inIndiaare rising continuously.