Young Research & Publishing Inc.

Investment Research Since 1978

Compensation was paid to utilize rankings. Click here to read full disclosure.

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Retirement Compounders®
  • Free Email Signup

The Disaster Waiting to Happen in Bond ETFs

July 16, 2019 By Jeremy Jones, CFA

By lassedesignen @ Shutterstock.com

There’s something akin to a bank run happening at some bond ETFs. Despite the easily traded nature of ETFs, when the underlying assets they represent aren’t very liquid, redeeming shares can be a real problem. Bloomberg’s Rachel Evans and Emily Barrett report:

A couple of prominent investment funds are currently living through a portfolio manager’s worst nightmare: So many customers are demanding their money back that withdrawals need to be frozen.

Amit Deshpande, a former longtime risk manager, sees it as a wake-up call. In particular, he’s watching the growing ranks of asset managers who rely on ETFs to act as cash equivalents. He wonders whether the funds can be sold off to pay fleeing clients in times of stress as seamlessly as the stewards of the $4 trillion market would like.

In other words, are exchange-traded funds the ATMs many managers believe them to be? Or will they fail to sell quickly enough and at sufficient prices during a crunch to fulfill customer demands?

“We’ve taken a bunch of semi-liquid securities, put that into an equity wrapper, said now you’re an equity and now you’re liquid,’’ said Deshpande, currently head of fixed income quantitative investments and research at T. Rowe Price Group Inc. “It doesn’t always work that way.’’

Read more here.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • One More Reason You Should Avoid Index-based Bond ETFs
  • The Trouble with this Bond Fund
  • The Trouble with Balanced Mutual Funds and ETFs
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. CNBC has ranked Richard C. Young & Co., Ltd. as one of the Top 100 Financial Advisors in the nation (2019-2022) Disclosure. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Money Market Assets Hit Record High: $5.4 Trillion - May 26, 2023
  • The Mania in AI Stocks Has Arrived - May 25, 2023
  • The Wisdom of Sam Zell - May 24, 2023

Search Young Research

Most Popular

  • Can the Supreme Court Stop Wealth Taxes Before They Start?
  • It's California vs. Florida in the Big State Debate
  • Are Investors Ready to Pounce?
  • Home Sales Slump as Prices Hit New Highs
  • The Power of a Compound Interest Table
  • A New Top Dog in the Delivery Business
  • China Proposes Massive Integrated Super Port Across Islands
  • Payment for Gifts Is Upending Retailers
  • Happy Black Friday
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

Your Survival Guy: “Life on Main Street Hasn’t Been This Hard in a While”

The Importance of a Balanced Portfolio

Invest with Peace of Mind and Comfort

RSS The Latest at Richardcyoung.com

  • Too Late to Reform?
  • Stop America’s Zombie Apocalypse before It Starts
  • AARP Sponsors Latest Rolling Stones Concert Tour
  • MAJOR ENDORSEMENT: Tucker Carlson Endorses Donald Trump
  • Connecticut Concedes the Fallacy of Banning Internal Combustion Engines
  • S&P Snaps Three Month Losing Streak
  • The Kings of Onlywood, Key West, Florida
  • Mob Rule vs Deterrence
  • Locking In a Generational Opportunity in Fixed Income
  • Slovenia Refunds Covid Mask Fines, Expunges Records

RSS The Latest at Yoursurvivalguy.com

  • Stop America’s Zombie Apocalypse before It Starts
  • Survive and Thrive November 2023: A Word or Two about Your Survival Guy’s Money
  • Small Government Just Works
  • Locking In a Generational Opportunity in Fixed Income
  • RIP Charlie Munger: Keeping It Simple Never Goes out of Style
  • Explosion in Gun Ownership Creates Difficulties for Progressives
  • It’s California vs. Florida in the Big State Debate
  • Shiffrin Brings It Home with World Cup Win at Killington
  • Prepare for Solar Storms in 2024
  • Can the Supreme Court Stop Wealth Taxes Before They Start?

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2023 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.