cancel
Showing results for 
Search instead for 
Did you mean: 
     
Highlighted
Participant ○○

ETFs are the new CEFs

I don't understand why VTEB and TFI are down so much today.

     % Change          Trade Time
MUB     -1.64 2020-03-19 11:07:26
TFI     -4.16 2020-03-19 11:06:43
VTEB    -5.28 2020-03-19 11:07:24

Even as of yesterday's close VTEB looked cheap:

VTEB	market	48.11
	NAV	51.86
	premium	-7.23%

According to Portfolio Visualizer, the monthly beta of VTEB on MUB is 0.94. So why should it be down so much more? I guess the generic answer for shocking price moves is that someone is a panicked or forced seller.

Muni CEFs are less liquid and have higher expense ratios than VTEB and should trade at larger discounts.

 

 

0 Kudos
2 Replies
Highlighted
Follower ○○

Re: ETFs are the new CEFs

Looking at current data from the Fidelity web site for VTEB, I get

Price=45.74       Inta day NAV=51.12           

This indicaates the the discount from NAV is 10.5%

I believe that VTEB is a high quality muni fund.

It sure is tempting to sell some of my OEFs and buy this.

0 Kudos
Participant ○○

Re: ETFs are the new CEFs

Bond ETFs Flash Warning Signs of Growing Mismatch
ETFs of BlackRock, Vanguard and others traded at large discounts to net asset value in recent days as coronavirus roiled markets
By Dawn Lim
Wall Street Journal
Updated March 23, 2020 6:18 pm ET
A broad set of bond exchange-traded funds are trading out of sync with
their underlying assets, testing investors’ faith in a fast-growing
part of the investment world.
Bond ETFs of BlackRock Inc., Vanguard Group and others
traded at historic discounts to the net asset value of their
underlying bonds in recent days. BlackRock’s iShares iBoxx USD
Investment Grade Corporate Bond ETF closed down at a discount of over
5% late last week, a record since 2008. The $28 billion bond fund,
with the ticker LQD, typically trades within a fraction of a percent
of the bonds it is designed to track. It closed at a discount of over
1.5% every day of the past week.

...

0 Kudos
Announcements

Morningstar is here to help you respond to the Coronavirus crisis.