Gregory Skidmore

Beware Small ETFs

It seems to be a problem with market makers. PCY has been trading below it's intraday NAV for two months now. It seems whoever makes the market is not redeeming their creation units. So it continues to trade below NAV. Usually market makers arbitrage this spread to make money. Right now NAV is $21.69 and last trade is $18.55. If you look at EMB from iShares it is actually a smaller Emerging Markets Bond ETF as well with lower volume and fewer assets under management. NAV is $86.60 and last trade is $85.21. EMB seems to have market makers doing a better job making a fair market. My firm holds PCY.

ETF Market Makers Struggled Last Week

ETF Investor - Thanks for the informative comment.

Bond Wars Update: International and Junk

Also interesting is the EMB is not trading this way. The portfolio do not look that different so this seems to be a PCY issue.

Bond Wars Update: International and Junk

It looks like PCY is trading at a discount to NAV. Can anyone confirm my logic? It's been this way for several days. I spoke to PowerShares and they seem clueless. These quotes are from yahoo.

^PCY-NV 23.26
^PCY-IV 22.95
PCY 20.20


On Sep 18 01:03 PM rayhendon wrote:

> Looking at the detail of their holdings, it looks like the death
> list of an airlines crash where there no survivors. Chilean debt
> is their largest holding, and the Chilean economy and currency has
> been besieged lately. This is also true for most of Latin America.
> Then they have Bulgaria, Hungary and Turkey--two of which (Hungary
> and Turkey) have currencies under severe attack. I don't have good
> data on Bulgaria, but it is a former vassal state of Russia, with
> little experience in modern capitalism.
>
> Then, they have over 4.5% invested in Russian bonds. Russia's equity
> market has been forced to close for the last two days, attributable
> to the meltdown of some of their largest banks--all are severely
> undercapitalized (like the U.S. banks, only more so), and the ruble
> has been vanquished.
> I have no time table for when any of these collapses will conclude.
> At the edges of the financial world, all these countries, indeed
> almost all emerging markets except China and India are suffering
> greatly as the world's investors try and get a grip of what's happening.
> I don't think there is going to be any fast recovery for them. But,
> when they do recover, it will be twice or three times the rate of
> developed economies. The volatility of emerging markets equities,
> currenies and debt is exceptional. You must be prepared to take some
> big lumps if you get into these investments. Personally, I have confidence
> that most of those I listed will recover. Their economies have far
> to go on the upside. But their fairy tale growth has ended for now,
> and it may be some months before all the commotion settles down.
>
> For now, there is an international flight to quality--can you believe
> U.S. Treasuries? They are still the prime debt instruments in the
> world.
>
> Best wishes,
>
> Ray
> Ray