For instance, Carl Icahn has been a vocal critic, warning that illiquidity in the bond markets could lead to problems for fixed-income ETFs, especially if investors suddenly rush toward the exits. [Liquidity Concerns in Corporate Bond ETFs]
“The worst thing these providers could do is nothing in response,” to concerns about bond ETF structure, Ben Johnson, head of ETF research at fund-research firm Morningstar, told the WSJ.
ETF providers and some other proponents, though, argue that ETFs help alleviate liquidity concerns since ETF investment activity on exchanges are much higher than traditional over-the-counter markets where bonds are traded. [Reviewing the Liquidity of Junk Bond ETFs]
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.