A nearly $800 million trade in a junk bond exchange traded fund this month has industry analysts wondering if more large investors will tap ETFs to acquire securities while avoiding the secondary market.

“Watch to see if this idea catches on. It could become popular among well-known investors who want to move into a given market quietly,” writes Brendan Conway at Barron’s.

Earlier this month, an unidentified investor exchanged nearly 20 million shares of SPDR Barclays Capital High Yield Bond ETF (NYSEArca: JNK) for $779.3 million in bonds held by the fund, Bloomberg News reported. [Investor Uses High-Yield ETF for Camouflage]

The investor established a large position in the junk bond ETF, then redeemed the shares in exchange for the underlying high-yield bonds, rather than cash.

Knight Capital handled the trade, which it said was an example of a “customized in-kind redemption,” according to Barron’s.

The firms that make markets in ETFs and ensure their liquidity are known as “authorized participants.” Large blocks of ETF shares are created and redeemed “in-kind” based on demand, which is one reason why ETFs are tax efficient. [The ETF Creation and Redemption Process Explained]

Also, there could be a link between the JNK trade and a big transaction in PowerShares Senior Loan Portfolio (NYSEArca: BKLN). [High-Yield, Bank Loan ETF Trades Draw Attention to Debt Markets]

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