Does ETF Volatility Represent The Will of Investors?
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Monday, July 08, 2013

Does ETF Volatility Represent The Will of Investors?

Global ETF flows broke the $100 billion mark year to date in May. But market sentiment shifted in June, suddenly turning the tables on investors, and setting another record—global fixed income ETFs saw the first outflows since 2010, ETF Trends' Dodd Kittsley wrote.

Other fixed income categories had outflows of $13.5 billion.

The lesson we should be taking from this, Kittsley writes, is that ETFs are used to express market sentiment to a greater extent than other products.

U.S. ETF volumes climbed in June. Great shifts in investor sentiment are typically followed by high ETF trading volumes. This underlines a point made by BlackRock earlier this week that ETFs are the "true market."

Kittsley makes a point to say that investors were able to move quickly and efficiently in June and that ETFs delivered liquidity under stressed market conditions. Some writers may mention that while individual investors did not face a halt on cash redemptions, broker dealers did, and that ETFs are only as liquid as their underlying assets.

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