Fed Lifeline Saves Bond Funds Teetering on Brink of ETF Hell
- Mutual fund net-asset value plunge slows down on Fed
- Fed provided needed liquidity to funds facing redemption waves
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The Federal Reserve’s unprecedented step into U.S. corporate bonds helped cure many of the massive dislocations in exchange-traded funds -- and may have saved mutual funds from a similar fate.
After prices for the biggest fixed-income funds held in a kind of dazed stillness during the worst of the sell-off -- presumably because the bonds they owned simply weren’t trading -- net-asset values on some of them dropped precipitously early last week as their outflows forced sales on a frozen market.