Now, some investors may be asking themselves if having a growing number of institutional investors in the market is a good thing. After all, does that really help the average investor? Are they better off? Here it turns out that the answer is probably yes. Having a larger, more diverse set of investors in the market will generally:
- Increase trading volumes and available liquidity for everyone.
- Increased fund size, which generally results in improved tracking error for an index fund versus its index. This helps every investor of a fund.
- Result in the fixed income ETF landscape expanding, giving investors a larger number of investment choices.
At the end of the day, a larger and more liquid fixed income ETF market can help all investors achieve the same goal: to create a more efficient fixed income portfolio. And that is something everyone can agree is a good outcome.