Its been many, many, many years since markets and participants have experienced prolonged distress (COVID was short and sharp) and in that time:
derivative and ETF trading has boomed; whilst
the number of market makers has consolidated to the point where an enormous chunk of daily flow goes through just a handful of market makers.
Volatility ETFs routinely blow themselves up and have issues because the size of these ETFs can exceed the capacity of the VIX futures market. Fixed Interest ETFs regularly trade at premium/discounts to NAV because there isn't the liquidity in the underlying markets and are primed for a blow up, and as for equity ETFs, if market makers reach liquidity limits there is the potential for significant illiquidity issues there as well.
Don't be surprised if a liquidity crunch with some of these market makers quickly unravels the perceived safety of ETFs. If there is a proper blow up at some point and investors can not transact in a banner ETF or a significant discount develops there could be a rush back to traditional fund managers.
I haven't seen enough blood to be a buyer yet, but I think the future for fund managers maybe brighter than it seems and fund managers maybe the beneficiary of future black swan events.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)