“It can make more economic sense even for seasoned Treasury traders to use the ETF for duration and risk trades than to trade the bonds in the underlying basket,” Tucker said in the article.
ETFs are also seen as a more liquid source to access the bond market than trading the individual bond securities.
“Trading the ETF is incredibly efficient for those than can operate within the limits of the liquidity offered on the exchange,” Tucker added.
For more information on the bond market, visit our bond ETFs category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of LQD.