Jim Wiandt

iShares ETF Tracking Error: Risks and Explanations

On AGG, you are obviously right, that one Friday, AGG traded 8 PERCENT off it's NAV- FOR THE DAY. And the High Yield iShare was off a cool 28% for the day. Whoa. But it's not actually really the ETF blowing up, as much as it is the BOND MARKET blowing up. On that day I would put a LOT of money on the ETF serving as a price discovery mechanism over the indicative NAV of the underlying index, which was stale and inaccurate. That's my take. We ran a lot of blogs and articles on this in the last week or two on indexuniverse.com