It's tough to get consistent returns without taking on unknown risk. Aivars Lode
Exchange-traded
funds became hard to price as stocks tied to them cratered
Monday’s mayhem
exposed significant flaws in the new architecture of Wall Street, where stock-linked
funds—as much as shares themselves—now trade en masse on U.S. markets.
Many traders
reported difficulty buying and selling exchange-traded funds, a popular
investment in which baskets of stocks and other assets are packaged to
facilitate easy trading. Dozens of ETFs traded at sharp discounts to their net
asset value—or their components’ worth—leading to outsize losses for investors
who entered sell orders at the depth of the panic.
Products built
to provide insurance for investors came up short. As a result of trading halts
in futures tied to the S&P 500 index, it was difficult for investors to get
consistent prices on contracts linked to them that offer insurance against
S&P 500 declines.
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-Wall Street Journal
Continue reading article here
-Wall Street Journal
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