Investors are highly focused on market liquidity and with good reason. Ultimately, an ETF is subject to the same bond market as every other investment vehicle.
One benefit of an ETF is that the secondary market can provide investors with another venue to trade that does not necessarily require them to touch the primary (or underlying) market.
However, ultimately investors should always consider fixed income ETFs to be as liquid as the underlying securities they track.
The rise in fixed income ETF investing shows no sign of abating. Since the first fixed income ETF launched in 2002, they have not only endured, but even prospered throughout market events including the 2004 US Federal Reserve tightening cycle, the credit crisis, sovereign debt crisis, the fiscal cliff, debt ceiling debate, the ‘taper tantrum’, the energy bear market of 2014 and the UK Brexit vote.
Looking to the remainder of 2017, as regional monetary policies diverge and geopolitical risk continues, the flexibility of ETFs to invest across the yield curve are likely to prove useful for a growing range of investors.
Claire Perryman is UK Head of SPDR ETFs at State Street Global Advisors
