Food for thoughts - liquidity of a ETF vs its underlying assets

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Article published on Dec 24, 2021 in the Wall Street Journal.

Municipal bonds are mainly US investors oriented, but the article raises interesting points:

  • Diversification of owning an ETF vs direct line. Making it easier to manage and follow.
  • Size of the ETF vs its asset class
  • Liquidity of the ETF vs the liquidity of its underlyings

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Interesting and correct, but rather of theoretical nature for us.

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Money Stuff covered it quite extensively a few months ago, there’s even an argument that the ETFs are actually priced more correctly for those kind of assets, due to the extra liquidity.

https://www.bloomberg.com/news/newsletters/2020-03-11/money-stuff-bond-market-liquidity-did-great