For Bond ETFs, It’s All About the Liquidity

ETF Trends

While exchange traded fund providers duke it out in a fee war to attract investment interest in the equities space, for bond ETF investors, low fees are not always the highest priority.

According to a Guggenheim Investments survey, 70% of advisors are looking into fixed-income ETFs over individual bonds or bond mutual funds because of their convenience and liquidity, whereas 16% attributed costs as the primary factor, reports Jason Kephart for InvestmentNews.

Bill Belden, head of product development at Guggenheim, points out that convenience and liquidity standout when putting bond ETFs and alternative options side-by-side. Bond ETFs offer targeted exposure and intraday accessibility.

“Individual bonds have costly spreads and mutual funds don’t have the continuous pricing,” Belden said in the article.

However, some bond markets are inherently less liquid than others. For instance, the municipals and high-yield bond markets are particularly less liquid and the ETFs can trade at premiums to their net asset values, but the costs are still lower than the spreads on individual bonds, Belden added.

For more information on bond funds, visit our bond ETFs category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Rates

View Comments (0)