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New Credit Derivatives

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

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