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.


Matt Tucker, CFA, is the iShares Head of Fixed Income Strategy and a regular contributor to The Blog. You can find more of his posts here

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