every corner of the markets.
Yet the rush to create ETF vehicles to access illiquid or hard-to-value asset classes has prompted concerns that the pricing of ETF shares in some cases can diverge sharply from the value of the underlying investments.
The Financial Times reports that the Federal Reserve Bank of New York is looking into how ETF portfolios of less-liquid instruments such as high-yield bonds, commodities and emerging-market stocks perform in turbulent market conditions. The paper cited recent swings both above and below “net asset value” in the Market Vector Russia ETF Trust(NYSEARCA:RSX) and the iShares iBoxx $ High Yid Corp Bond (ETF)(NYSEARCA:HYG) as possible evidence of stripped gears in the fund-pricing machinery.
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