ETFs like Proshares and BetaPro in Canada have gotten more popular in the past year. Many of us have gotten rather concerned about the associated credit risk or counterparty risks when owning one of these ETFs. Morningstar recently reported what are some of the risks associated to trading ETFs.

"The first bit of good news is that, even if the swap contract is defaulted upon, the fund still holds all of its cash assets. The most a fund could lose is the return owed through a swap contract; it will never lose principal. The second bit of good news is that these swap contracts are very short-term, never written for more than 30-day periods. This gives leveraged ETFs some agility and allows them to quickly close out any exposure to investment banks that look to be edging toward bankruptcy."

Source: http://biz.yahoo.com/ms/080919/253712.html