Skip to Content
ETF Specialist

Our Take on the Bond ETF Dilemma

The problem is in the index, not the ETF.

A lot of noise has been made recently about the trouble that bond ETFs have been having when it comes to tracking their respective indexes. It takes two to create tracking error: an ETF and its index. So, how come all the focus is on the bond ETF? The indexes certainly play a part in these deviations and maybe, just maybe, in the end, the index is wrong and not the ETF.

For anyone not familiar with bond indexes and how they are constructed and calculated, there are a few things that distinctly set them apart from equity indexes. The most important being that, with equity indexes, you can generally expect the underlying securities to be liquid. That is, they trade every day, and what that really means is that you have market-driven price discovery for stocks every day. So, calculating the proper value of an equity index is usually a pretty straightforward exercise. You weight the stocks according to the index methodology (market capitalization being the most common), multiply that by the market-driven price, and sum the results.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.