Warning For Credit ETFs: Liquidity May Be Threatened By Underlying Asset Liquidity

Asset Liquidity

LQD tracks an investment grade index, and its dislocations are wider than those of equity ETFs.

Asset Liquidity

Moody's also examined BKLN and HYG

Asset Liquidity

credit etfs

Thus, they note that equity ETFs remain very liquid even during times of extreme volatility in their underlying index. However, credit ETFs display very obvious differences during times of turbulence in the markets.

credit etfs

 

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