Although ETFs that zero in on bonds have grown in assets along with volatility in fixed-income securities, it’s not clear if ETFs are the cause of the wider price swings.
“Uncertainty breeds volatility,” said Kevin Quigg, the global head of strategy and consulting at State Street’s ETF group, in the Bloomberg story. “The volatility that’s being expressed in the marketplace is much more reflective of what’s going on in the broader marketplace.”
ETFs aren’t responsible for the price swings but have made the market more transparent, said Matt Tucker, the head of iShares Fixed Income Strategy at BlackRock.
The iShares ETF “has made the high-yield market visible for the first time for investors,” Tucker told Bloomberg. “They hadn’t realized that the high-yield market was that volatile. It was always that volatile; it just wasn’t that easy to see.”
iShares iBoxx High Yield Corporate Bond ETF
