The Etf Liquidity Question: Tin The Passive Universe Concur Upwards Inwards The Consequence Of A Marketplace Crisis?
Markets then dominated past times ETFs get got non been genuinely tested past times a post-QE world.
I idea this looked interesting.
Despite the bear witness espoused past times evangelists, the fact remains, markets then dominated past times ETFs get got non been genuinely tested past times a post-QE world. Since the GFC, global key banks — especially the Fed — have served every bit marketplace liquidity providers, filling the gap every bit regulation-restrained big banks get got retreated from their traditional market-making roles (WILTW May 24, 2018). Much of that liquidity back upward has already been stripped away every bit QT has progressed.
Threats of a marketplace crisis are rising, from geopolitical tensions in addition to global increment concerns to the weakness of marketplace leaders in addition to over-indebted zombies. Therefore, the ETF liquidity query is to a greater extent than essential to evaluate than ever. And to our mind, the skeptic illustration is far to a greater extent than convincing than the evangelist case, pregnant today to a greater extent than than ever, caution is an imperative.
One of the defining dynamics of the ETF-era — and the Digital Age every bit a whole — has been consolidation of power. On the telephone substitution level, behemoths Vanguard, Blackrock, in addition to State Street get got seen their AUM skyrocket since the GFC (chart below). Vanguard solitary owns at to the lowest degree a 5% stake inwards 491 stocks inwards the S&P 500, upward from 116 inwards 2010, in addition to some 7% of the entire index. As Vanguard founder Jack Bogle said final year, “Too much coin is inwards besides few hands.”
No comments