Finance
ETFs and the Danger of an Illiquidity Doom Loop
Turmoil in oil and bond markets puts the popular funds in the spotlight.
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Exchange-traded funds have been taking a bigger role in financial markets in the past decade. So it should come as no surprise that they’ve also been featured players in the rolling market dramas that have accompanied the coronavirus crisis.
ETFs are funds that trade throughout the day like stocks. When an ETF owns widely held, heavily traded securities such as the stocks in the S&P 500 index, it runs almost seamlessly. Things can get trickier when an ETF holds more complicated assets or markets get stressed.