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What happens to my initial investment if some or all companies in ETF such as VOO, QQQ etc goes bankrupt over time?
Assuming I bought $10,000 worth of QQQ and after 20 years all companies in ETF goes bankrupt and new 100 companies included. Will my 10K become 0 in this case? Assuming I would own individual company stocks in ETF it seems to me it should be zero, but based long term self cleansing feature of index funds that I read it should not.
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Will only go to 0 if all companies go to 0 within a very short time span. Else the ETF will be re-balanced accordingly.
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Tan Choong Hwee
12 Sep 2022
Solutions Specialist at Providend
In the extreme case when all 100 companies in NASDAQ 100 went bankrupt at the same time, their share...
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Companies that are in VOO and QQQ may definitely get bankrupt over time. However for those being selected into the S&P500, they are constantly being evaluated and only the top 500 companies in the USA can remain in it. Hence, these bankrupted companies will fall off the index if they do face liquidity or profitability issues in the future.