Bonds mainly trade OTC, and as such, liquidity is a function of a handful of investment banks making markets, and their customer’s willingness to trade. Holding bonds whether directly, or via fund/ETF, is not what people think when they describe it as ballast. Look at every major stock market downturn and there was an associated large drop in any funds holding a mix if corporates and yes, even US tsy bonds. In each case they bond market recovered quickly. This is a clear demonstration of the periodic lack of liquidity, but it impacts all bond holders, not just bond ETFs.Main thing is that the SEC needs to police the liquidity requirements placed on both mutual funds and ETFs. The question of how mutual funds and ETFs behave when liquidity dries up shouldn't arise, because they shouldn't be investing more than a small percentage of their portfolio in illiquid issues.
Statistics: Posted by beyou — Fri Dec 15, 2023 11:51 pm — Replies 19 — Views 1006