[RightGeek]

Doesn’t it depend on the ETF? Regular stock ETFs hold the shares and can just sell them for whatever they bring in a down market and give the money to the unfortunate customer. For other kinds of ETFs (e.g. leveraged) it would be much more of a problem.

[RoosterRedux]

Regular stock ETFs hold the shares and can just sell them for whatever they bring in a down market and give the money to the unfortunate customer.

Absolutely. ETF's are just buckets of shares.

Leveraged ETF's, reverse ETF's (shorts) and the like are another matter. They are built on bank commitments and things like credit default swaps, etc and all manner of weird derivatives.