New Credit Derivatives ETFs Helping People to Play Hedge Fund
A plan to allow trading in eight new ProShares ETFs backed by wagers on the creditworthiness of the riskiest to the safest corporate borrowers has been signed off by regulators in May 2014.
Those
funds, which package credit-default swaps, join more than 250 others
that are based on derivatives, an arena traditionally dominated by hedge
funds.
The
reality is that while anyone can invest in these ETFs, which provide
easy access to harder-to-trade, privately negotiated markets, the target
demographic is probably institutional investors. They are a growing
presence among buyers of fixed-income ETF shares, which trade on
exchanges like stocks and are backed by everything from Treasuries to
below investment-grade loans.
About
two-thirds of debt managers are using ETFs this year, up from 55
percent in 2013, according to a Greenwich Associates survey released
yesterday. Why? Because they’re easy to buy and the underlying markets
are, in many cases, becoming harder to navigate as Wall Street dealers
cut their inventories of debt traditionally used to facilitate trading.
Source: Businessweek
