ETFs Transform Into Closed-End Funds

It appears some large, liquid ETFs are trading more like closed-end funds than ETFs. More to the point, the shares prices of bond ETFs are separating from their net asset values, which is the true value of the underlying assets.

“Almost anywhere you look, bond exchange-traded funds are trading at fire-sale prices,” says Murray Coleman in IndexUniverse. “In some cases, the distorations are shattering historic levels.”

Coleman is following up on a trend I noticed in the equity ETFs after the market’s Sept. 29 plunge. AT the time I saw equity ETFs were trading at a premium to their NAVs, and seeing larger tracking error than typically associated with the more liquid funds. IndexUniverse blames the disruption in the credit markets


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