ETFs are, for the most part, safe from counterparty risk. The only place where counterparty risk is very important is in TNCs. Most ETFs are actually quite safe because most of them are index funds. An index ETF is simply a fund that invests in exactly the same securities as a given index, such as the S%26P 500, and tries to match the index's return every year.
While all investments involve risks and index funds are exposed to all market volatility, meaning that if the index loses value, the fund follows suit, the general trend of the stock market is upward. Over time, indices are most likely to gain value, and so do the ETFs that track them. Thanks to their lower costs and their ability to diversify a portfolio, ETFs are considered low-risk investments. Exchange-traded funds (ETFs) are baskets of securities that are traded on an exchange like a stock.
They are generally designed to track an index, sector, commodity, or other asset, while offering diversification, limited risk, and low costs.