Two versions of reality – Exchange-traded fundamentals | Finance and economics

Via The Economist

JEREMIADS HAVE long argued that if some of the $6trn-odd of assets underpinning exchange-traded funds (etfs) are illiquid, then the funds must be too, posing a big risk to their investors. But so far there are signs of strain but not panic. During the current turmoil, some etfs are trading at a discount to their net asset value, often those that have invested in debt. But that may be because they are easy to trade, making them a better gauge of reality than the last recorded price of the underlying securities.

This article appeared in the Finance and economics section of the print edition under the headline “Exchange-traded fundamentals”

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