Moody’s Has Warning For Credit ETFs: Liquidity May Be Threatened By Underlying Asset Liquidity

Exchange-traded funds are generally seen as simple investment vehicles because they are passive in nature. They track their underlying index or assets, but the way they do so is far from simple. Although the ETF markets have enjoyed a calm period of tremendous growth over the last 10 years, they could experience their first round of extended volatility in the near future.

Q1 hedge fund letters, conference, scoops etc

Equity and credit ETFs have grown fast

In a note last week, Moody's analyst Fadi Abdel Massih and team note that it requires a wide array of participants to provide and maintain liquidity in the ETF market. "Market-makers and Authorized Participants" seek arbitrage opportunities by balancing the supply and demand...