Any value in multiple ETFs?

[jalanlong]

I currently own a very basic 4x PP (TLT, IAU,VTI,SHV). Now that I am amassing a decent amount of money in each ETF, is it of any value to buy multiple ETFs for each asset to spread the risk of one ETF going under?

For example instead of having all of my LT Treasury money in TLT I can split it between TLT, VGLT and SCHQ. Gold could be split IAU, SGOL,AAUM.

I know it wouldn’t add anything to performance but is there any value in having my counterparty risk spread that way? Or is it worrying about a very unlikely event?

[KevinW]

is there any value in having my counterparty risk spread that way?

Yes, splitting an asset across multiple ETF issuers hedges against an issuer going out of business suddenly or committing some kind of malfeasance. Harry Browne suggested splitting the stock allocation across multiple fund sponsors (and holding the other three assets directly).

Or is it worrying about a very unlikely event?

It is extremely unlikely, especially with first-tier issuers (Vanguard, iShares, Fidelity, Schwab, etc.), due to the immense market pressure and regulations that these firms are subject to. I'm not bothering with it right now.

But it also doesn't take very much effort to diversify, so there isn't much downside to doing it.

I've thought that an easy compromise would be to use one set of ETFs in a first brokerage account and a different set in a second brokerage account. For example use Fidelity funds in your 401k and Vanguard/iShares funds in your IRA. That way you have some issuer diversification, but each individual account only holds 4 funds to keep rebalancing simple.