What crises really tell us about bond ETFs

Amid lots of media focus on bond ETFs and discounts, Tabula CIO Jason Smith looks at different approaches to ETF construction to see if some ETFs are more susceptible than others.

Key Takeaways

– Discounts in bond ETFs can result from stale benchmark prices

– Some large and well-managed bond ETFs are hampered by the indices they choose to track

– ETFs that track liquidity-focused indices may trade closer to NAV in a crisis

– When central banks intervene, it’s the large, liquid bonds they tend to buy and the more liquidity-focused ETFs that stand to benefit

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