Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:The iNAV Debate Continues Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, June 28, 2013

The iNAV Debate Continues

News summary by MFWire's editors

Three publications picked apart the reasons for the ETF sell-off and frustrations over halting cash redemptions.

The debate over the usefulness of iNAVs continued this week, with IndexUniverse's Ugo Egbunike defending the measure. Though he admits the iNAV is not perfect, such as being susceptible to mispricings, giving a stale value for international ETFs and fixed income ETFs, the iNAV shouldn't be kaput. It should upgraded from a 15 second interval in ETF pricing to a 1 second interval.

Egbunike argues that investors should change their methodology when moving outside stock ETFs to fixed-income, international equity and community based ETFs. It would be best if regulators provided the public with fair valued iNAV quotes.

The real problem, he argues, is that some investors treat ETFs exactly like stocks. Investors should understand the complexity of ETFs and think differently about how to trade them:
Unfortunately, many investors treat ETFs like stocks: “I need to purchase an ETF now, so I’ll use a market order”; or “I’m interested in using liquidity as a filter, so I’ll use the bid/ask spread to determine what I can buy.” All—and I do mean all—of these assumptions are wrong.
The Financial Times wrote an explanatory piece, examining why the ETF market experienced a bottleneck last week. Investors should remember that creations and redemptions can take more than one day, spending on global time zones and the liquidity of the underlying assets.

On the bond ETF front, Rick Ferri discourages investors from buying bond ETFs if they want to avoid the Bond ETF Discount problem when markets experience volatility and investors sell off ETFs en masse.

If you would like to read more, click , here and here and here

Edited by: Casey Quinlan


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2020: Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2020
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use