Growth of fixed income ETF market may impact HY bonds

Author: John Crabb | Published: 13 Sep 2018

If the fixed income exchange-traded fund (ETF) market continues to grow at the pace it has been since the financial crisis it could have significant implications for high yield products, sources suggest. Although the market is still small, its growth will mean the need to change processes and procedures. Price setting mechanisms could also be affected.

Whether ETFs have a negative impact on the market is an interesting area of debate. A lot of economic and practitioner research suggests that the ETF market isn’t big enough to impact the global financial markets. However, as it continues to grow the question will come up over and over again.

"It’s primarily an industry that for a very long time was actively managing mutual funds as well as individual stock ownership and bond ownership," said Mo Haghbin, head of beta solutions at Oppenheimer Funds. "Now with the growing popularity of index tracking...