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ETF Tracking Errors in Rout Shows Access Comes With Risks

Investors lured to exotic assets by the convenient access that exchange-traded funds provide were reminded last week that they can’t dodge the volatility or illiquidity of those markets.

Dozens of ETFs, mainly those tracking emerging-market stocks, sold at big discounts to their underlying holdings as investors fled developing nations. The $468 million iShares MSCI Indonesia Investable Market Index Fund, run by New York-based BlackRock Inc., traded 7 percent below the value of its holdings on June 20, the largest discount among U.S.-traded ETFs with at least $100 million in assets, according to data compiled by Bloomberg.