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Post by bobfl on Apr 15, 2023 14:06:47 GMT
Sorry for my basic questions. I could look this up but someone could tell me in 2 seconds and help new investors with this very basic info. On the Bloomberg ETF program, they said: Hy Yield bond ETFs lost about $11 Billion dollars in the week. Does that mean the ETFs have to sell off that amount of holdings?
$50 billion went into higher quality bonds. Do the ETFs have to buy more bonds (if they don't hold that new money as cash)?
When everyone flooded into MMs where does that new money go? (What actual instruments). Why won't the high demand drive up prices for these instruments. When everyone leaves these MMs, who buys back the actual instruments they are leaving behind? Thanks! PS.On reflection if the MMs are ultra short, then the holdings would have a short term step expiration. Still appears that the 30 day, 60 day paper cannot just be bought and sold back instantly by these MMs.
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Post by yogibearbull on Apr 15, 2023 14:15:01 GMT
Much of the trading for ETFs is among the investors, and the ETF AUM isn't affected.
But there is a creation/redemption mechanism used by authorized-participants who use it to keep the ETF premium/discount under control. These are often 50,000-100,000 share blocks, and these do lead to inflows/outflow. If this mechanism is disrupted for any reason, the ETF can trade like CEF.
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Post by bobfl on Apr 15, 2023 14:25:37 GMT
Much of the trading for ETFs is among the investors, and the ETF AUM isn't affected. But there is a creation/redemption mechanism used by authorized-participants who use it to keep the ETF premium/discount under control. These are often 50,000-100,000 share blocks, and these do lead to inflows/outflow. If this mechanism is disrupted for any reason, the ETF can trade like CEF. Interesting. Thanks. I do see major volumes periodically on the thinly traded individual instruments I own. So some ETF or fund is pushing these out (or buying) which heavily influences the individual price of these instruments.
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Post by steadyeddy on Apr 18, 2023 22:04:32 GMT
Sorry for my basic questions. I could look this up but someone could tell me in 2 seconds and help new investors with this very basic info. On the Bloomberg ETF program, they said: Hy Yield bond ETFs lost about $11 Billion dollars in the week. Does that mean the ETFs have to sell off that amount of holdings? $50 billion went into higher quality bonds. Do the ETFs have to buy more bonds (if they don't hold that new money as cash)? When everyone flooded into MMs where does that new money go? (What actual instruments). Why won't the high demand drive up prices for these instruments. When everyone leaves these MMs, who buys back the actual instruments they are leaving behind? Thanks! PS.On reflection if the MMs are ultra short, then the holdings would have a short term step expiration. Still appears that the 30 day, 60 day paper cannot just be bought and sold back instantly by these MMs. bobfl , the remaining term of MM holdings (t-bills, commercial paper, and repurchase agreements) is typically less than 60 days and the fund manager chooses from the most liquid pool of such assets. In exchange for charging a 0.2% or 0.3% expense ratio, this is what the fund manager does to "minimize risk" of deviating from a $1 NAV. As we all know there were an instance or two where the MM funds "broke the buck," but the sponsoring fund family covered the losses. In the current situation where small banks are viewed as risky, and large banks aren't paying much for deposits - there is a mad rush towards MM funds. So, I suppose there is more risk now in the crowded MM funds than was historically. Again, the hope is Aunt Yellen and Uncle Powell will come to the rescue should some strange things happen to MM funds.
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