If vanguard fund failed, would its ETF have problems too?

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LH
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If vanguard fund failed, would its ETF have problems too?

Post by LH » Fri Jan 13, 2012 5:14 pm

If the Vanguard US TSM fund had problems due to fraud, say a Corzine or Madoff clone got a hold of it(which of course would never happen, so do not get excited, this is a theory question, in the theory section) would the corresponding vanguard ETF, VTI have trouble too? Or is the Vanguard ETF isolated from the corresponding fund risk wise?

thanks for any information,

LH

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mas
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Re: If vanguard fund failed, would its ETF have problems too

Post by mas » Fri Jan 13, 2012 7:56 pm

LH wrote: Or is the Vanguard ETF isolated from the corresponding fund risk wise?
I would think the two are not isolated.

http://www.finra.org/Investors/protecty ... ds/p006022
What Are Mutual Fund Classes?

A single mutual fund, with one portfolio and one investment adviser, may offer more than one "class" of its shares to investors. Each class represents a similar interest in the mutual fund's portfolio. The principal difference between the classes is that the mutual fund will charge you different fees and expenses depending on the class you choose.
If this is to be believed (and it matches my preconceived notions), then there is a single pool of assets. Presumably fraud would be committed on the underlying assets themselves, and would impact every share class.

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