Let’s assume a scenario of total hostility between the US and the EU (e.g., a complete severance of relations, including asset seizures on both sides, similar to US-Iran or US-North Korea). Since most users in this sub are American, let’s consider the following scenario:
An American buys an all-world ETF from an issuer based in the US, through a US broker, and the ETF’s assets are held in the US. However, some of the ETF’s underlying stocks are European and traded on European exchanges. Does this mean that the ETF issuer would no longer be able to trade these stocks? In other words, would the ETF lose its ability to track the underlying index?
Don’t get me wrong—having a long-term perspective, I’m not afraid of the market dropping 80% or 90% tomorrow. However, permanently losing ownership of part of an investment or being unable to trade it would definitely concern me. I’m not saying it will happen, I was just trying to understand how things would work.