Yes, Bond ETFs Can Go Haywire. But That’s a Good Thing, Says BIS
- Research on baskets shows they help absorb shocks in turmoil
- ‘ETFs could be a stabilising force during runs,’ paper says
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Critics of the passive-investing boom in bonds warn about the risks stemming from the mismatch between highly tradable ETFs and the illiquid securities they hold.
Turns out this very discrepancy might help stabilize the market, according to the Bank of International Settlements.