Concerns around fixed income ETFs will 'never be put to rest' - Howie Li

Manager praises bond ETFs following spring volatility

Investors will always be "trying to find reasons for ETFs to not do their job", according to head of ETFs at Legal & General Investment Management (LGIM) Howie Li, who is "glad" the passive instrument was put to the test during the coronavirus-induced market turmoil earlier this year as it "did what it was supposed to do" and he no longer has to "battle those questions that we have all been having to answer over the past decade".

Speaking particularly about bond ETFs, Li explained that after an initial concern around spreads, discounts and premiums in passive fixed income during March and April, it became quickly apparent that the underlying bonds were facing the same issues and the ETFs were offering a "clear, transparent and real-time" analysis of what was happening in the underlying markets. "Previously, it would just be the bond buyers or managers who would see these kinds of widening spreads on the underlying instruments, but all of a sudden these ETFs are giving… the kind of information that people did not ...