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Opinion
Brian Chappatta

Would Punishing Panic Sellers Doom Bond Mutual Funds?

More widespread use of “swing pricing,” which penalizes withdrawals during times of market stress, is gaining momentum among regulators.

Lael Brainard and Janet Yellen are concerned about bond mutual funds.

Lael Brainard and Janet Yellen are concerned about bond mutual funds.

Photographer: Eric Baradat/AFP (Brainard); Alex Wong (Yellen)/Getty Images

“If the ETF came first, the SEC would never approve the mutual fund structure.”

I keep thinking about this quote from Matt Hougan, former chief executive officer of Inside ETFs, which I cited in a Feb. 19 column titled “Mutual Funds Are Not Long for This ETF World.” I argued that the Federal Reserve’s unprecedented intervention in the U.S. corporate bond market was a plot to rescue fixed-income mutual funds from potential disaster and that the coronavirus crisis would only hasten the rise of exchange-traded funds in their place.