Swiss fintech issues own ETF which follows for example Swiss equity index. What happens with funds invested in ETF, if fintech managing the ETF bankrupts? Is there a risk that ETF holders would not get their money back?
I think in Switzerland funds and ETFs sold to retail investors have legal protections, and the assets of the ETFs belong to the ETF shareholders. If the manager of the ETF goes bankrupt, the assets in the ETF are not part of the bankruptcy.
But that doesn’t protect against fraud, assets can only be sold and money given back if the assets actually exist. I assume they are monitored by FINMA and the yearly reports audited so that the reports are faithful.
I think when an ETF provider goes bankrupt, the ETFs are often transferred to another provider interested in taking the asset management over, or they are merged into the new provider’s equivalent ETFs. If the ETFs were well managed there is a value in managing them and getting the fees of customers who are already invested.
I think it’s also in the interest of the financial infrastructure as a whole to avoid selling major quantities of positions to avoid a disruption of the markets. That would be another reason for another provider to jump in.
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