Briggsy

Distressing Details of the UltraShorts

This is an excellent question. The only thing which keeps ETFs net-asset-value honest is the ability to create or redeem shares by delivering or demanding the defined portfolio content in exchange. With the ultra short ETFs, the holdings may be so esoteric and illiquid that this self-correcting mechanism is ineffective to keep share price tethered to NAV.


On Jan 23 06:01 PM Thomas J. Gordon wrote:

> Do people think there is a psychological component to these ultra
> shorts or are they only priced according to the value of the assets
> they hold? srs is an etf. It sits on the market and people can
> trade it. Those days in november when it went over 200 there were
> lots of people who thought the reits were done for and that they'd
> never borrow another dollar in the credit markets. Is that why it
> went over 200 and quickly fell back?

Wednesday Outlook: Commodities, Emerging Markets

It is inspiring to see how many folks believe it is their patriotic duty to go long at this level and volunteer to absorb more of the economy's de-leveraging in their own accounts.