Episode 49: BlackRock’s Stephen Laipply

Fixed Income ETFs – Liquidity in a Crisis

In Episode 49 of the [i3] Podcast, we speak with Stephen Laipply, US Head of iShares Fixed Income ETFs for BlackRock. We discuss how fixed income exchange traded funds (ETFs) fared during March and April of this year, when many bond markets froze due the global pandemic. We talk about price discovery in listed and OTC markets and the question whether we will ever see an institutional grade portfolio comprising solely ETFs.

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1:00 My father bought me my first stock when I was a child and it happened to be Apple, but…
3:00 First encounter with ETFs
5:30 The changing use of ETFs by institutional investors.
6:30 ETFs in Tactical Asset Allocation
8:00 Have fixed income ETFs remained liquid when credit markets froze?
8:44 We saw half of last year’s volume trade in a single quarter
9:30 How accurate do fixed income ETFs reflect the prices in the OTC market?
10:30 March 12 was one of the most challenging days in the risk off market.
11:00 If you compare 90,000 trades to a dozen of trades, then we have more confidence in the price discovery of those 90,000
13:00 You wrote a paper on fixed income ETFs as leading indicators?
15:00 Can you develop strategies based on the slight lag in information?
18:30 Sometime regulations can be a benefit to the sector. After the GFC, tighter regulations increased the demand for fixed income ETFs.
21:00 What type of institutional investors use these ETFs?
23:30 Relative trades with ETFs
26:00 Do fixed income ETFs trade like equities in the short term?
27:00 Just become an asset trades on an exchange, that doesn’t change the character of the asset class
29:00 What type of innovation do you expect to see in ETFs in the coming years?
31:00 Will we ever see an institutional-grade portfolio build completely out of ETFs?

This article is sponsored by BlackRock. As such, the sponsor may suggest topics for consideration, but the Investment Innovation Institute [i3] will have final control over the content.

About the [i3] Podcast

The [i3] Podcast is a conversation with some of the leading institutional investors around the world, discussing their philosophy towards investing, in particular towards portfolio construction and investment strategy. The [i3] podcast is available on iTunes, Google Podcast, Spotify, Stitcher or your favourite podcast platform.