10-03-2013 08:44 PM

Bond ETFs Help Melt Illiquid Markets

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Mutual fund managers, pension funds and registered investment advisers have been turning increasingly to exchange-traded bond funds to protect them should fixed-income markets turn nasty. Since May managers have been able to test the theory that ETFs allow them to better maneuver illiquid and volatile markets. That was the month, of course, when Federal Reserve chairman Ben Bernanke signaled to the markets for the first time that the Fed was preparing to taper its $85 billion in monthly bond purchases, which have kept interest rates at historic lows and fired up international markets. Bernanke


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