LONDON (Reuters) – A rush to sell global bonds in the past week has now rippled into the world of exchange-traded funds with some of the most actively traded seeing the most bulging gaps relative to the value of underlying holdings in years.
Exchange-traded funds offer liquidity in different asset classes and have become in recent years a one-stop shop for investors and traders to access different markets and get trading liquidity in previous illiquid parts of the market.
Thanks to years of low interest rates and placid market volatility, assets held by exchange-traded funds have doubled in size in less than four years, crossing the $6 trillion mark at the end of 2019, according to fund tracker ETFGI.
More impressively, bond ETFs which were hardly present a couple of decades earlier, now make up more than a sixth of the overall market, according to industry watchers.
But the violent swings in bond markets in recent weeks has taken a toll on some of these widely traded ETFS, with…