It is difficult to figure out where Mr. Gross is coming from. Is he trying to say his antiquated mutual fund structure is superior to that of an ETF? The Gross-Icahn argument is like saying you shouldn’t fly on commercial aircraft because there was a crash once. It is literally that illogical.
To be sure, there are plenty of risks in high-yield ETFs and Bank-Loan ETFs. Plenty of things can drive down the price of an ETF, and investors can lose money. With non-investment-grade bond and loan ETFs shares drop when spreads to the 10 year US treasury widen. That is certainly the case today but it seems largely driven by the energy and mining sectors where prices of their product have dropped rendering debt service and payback questionable. Attributing a price adjustment of a well-functioning efficient market to the superior structure of an ETF is an argument left wanting.