The bond ETF liquidity crisis that never was

Fears about the liquidity of bond markets have kept investors and regulators awake at night since the freezing of credit markets signalled the start of the Great Financial Crisis.

In recent years, this disquiet has extended to fixed income Exchange Traded Funds (ETFs), particularly corporate bond ETFs, because fixed income ETF’s AUM grew from around $25bn1 just before the crisis, to $1tn1 in 2019, without ever being tested by a major market shock.

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