Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Bond ETFs like BND AGG trading at unusual discount
Old 10-10-2008, 08:07 PM   #1
Full time employment: Posting here.
 
Join Date: Apr 2005
Posts: 524
Bond ETFs like BND AGG trading at unusual discount

These ETFs are down big today, their NAVs aren't down nearly as much. Both are trading at a significant discount.

AS of 10/10
BND Nav 73.66 price 69.96
AGG Nav 96.99 price 88.40

Anyone know what's going on here?
__________________

__________________
JB is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-10-2008, 08:17 PM   #2
Full time employment: Posting here.
 
Join Date: Nov 2005
Posts: 828
If you predict that interest rates are going to rise, you may decide to sell your bond fund, anticipating a future drop in NAV. Depending upon the type of bonds in the fund, you also might fear rising defaults if we do in fact have a severe recession/depression - another reason to sell the fund.
__________________

__________________
socca is offline   Reply With Quote
Old 10-10-2008, 08:30 PM   #3
Full time employment: Posting here.
 
Join Date: Apr 2005
Posts: 524
It looks like it's credit fears as treasuries aren't down much, but JNK is down 14.5%.
__________________
JB is offline   Reply With Quote
Old 10-10-2008, 11:02 PM   #4
Confused about dryer sheets
 
Join Date: Oct 2008
Posts: 2
I don't understand enough about this. Couldn't someone do some arbitrage and make some money? Are all the players gone or out of money?
__________________
mud60609 is offline   Reply With Quote
Old 10-11-2008, 11:10 AM   #5
Thinks s/he gets paid by the post
DblDoc's Avatar
 
Join Date: Aug 2007
Posts: 1,224
There is a thread about this over at the Bogleheads site. I don't pretend to understand what they are talking about so cannot summarize for you.

Bogleheads :: View topic - What the Heck is going on with BND?!?!

DD
__________________
DblDoc is offline   Reply With Quote
Old 10-11-2008, 11:47 AM   #6
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Bottom line is that investors are pre-emptively dumping mostly performing assets in a panic about their potential for increased defaults. They are willing to take a big hit relative to NAV in order to get out. The fact that Treasuries were flat to higher indicates it's simply a credit quality issue. I haven't looked lately, but I'll bet junk bonds are tanking now.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 10-11-2008, 02:17 PM   #7
Full time employment: Posting here.
 
Join Date: Apr 2005
Posts: 524
Quote:
Originally Posted by mud60609 View Post
I don't understand enough about this. Couldn't someone do some arbitrage and make some money? Are all the players gone or out of money?
Maybe because you can't short the underlying bonds. It will be interesting to see what happens over the next couple of days.
__________________
JB is offline   Reply With Quote
Old 10-11-2008, 02:18 PM   #8
Full time employment: Posting here.
 
Join Date: Apr 2005
Posts: 524
Quote:
Originally Posted by DblDoc View Post
There is a thread about this over at the Bogleheads site. I don't pretend to understand what they are talking about so cannot summarize for you.

Bogleheads :: View topic - What the Heck is going on with BND?!?!

DD
Thanks, that was helpful.
__________________
JB is offline   Reply With Quote
Old 10-11-2008, 04:56 PM   #9
Confused about dryer sheets
 
Join Date: Oct 2008
Posts: 2
I found this post today

Largest Bond ETF Now Trading At a Massive Discount - Seeking Alpha
__________________

__________________
mud60609 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Bond investing (ETFs vs Mutual funds) jIMOh FIRE and Money 4 10-04-2008 07:52 AM
Muni Bond ETFs ats5g FIRE and Money 1 09-14-2007 08:43 PM
Vanguard introduces four new low-cost bond ETFs justin FIRE and Money 2 04-10-2007 02:12 PM
Does anyone know where you can see premium/discount of ETFs in realtime? Olav23 FIRE and Money 2 03-14-2007 08:17 AM
Intl Growth/Value ETFs started trading today! Olav23 FIRE and Money 0 08-16-2005 04:45 PM

 

 
All times are GMT -6. The time now is 08:15 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.