Blackrock: ETFs are the true market | FT Alphaville

"Interesting. Blackrock has issued an open letter in the spirit of investor reeducation about its products, no doubt in response to the terrible reporting that’s been going on about its err… recent NAV discounts.

You can read the full open letter (complete with lots of bolding emphasis by Blackrock just to make sure you get the point) but a critical extract we think is the following (Blackrock’s emphasis).

The last few weeks have highlighted an underlying trend that merits broader public appreciation. More and more ETFs are becoming the true market, particularly when market sentiment shifts fast. ETFs are increasingly becoming the place where investors of all sizes can see the market price for a given investment exposure, and act on what’s really happening now in the markets. In a rapidly moving market, the reported prices of individual underlying assets may become stale. The ETF price can become the true price for that market, and the underlying assets may eventually catch up with any gap between the two (called a “premium” or “discount”). This is a main reason that so many investors large and small opted to use ETFs during the last month’s volatility."

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