Robeco: Bond ETFs hampered by low liquidity

In a recent report, Patrick Houweling, head of quantitative credit research at the Dutch firm, found the tracking error for high-yield ETFs ranged from 7.3% to 12%, while the highest average tracking error for investment grade ETFs reached 1.63%. There are only three high yield ETFs in the market, and all significantly underperformed their respective benchmarks, Houweling found. From December 2007 through March 2010, the SPDR Barclays Capital High Yield Bond fund managed by State Street Global Advisors (SSgA) fell short its benchmark, the Barclays Capital US High Yield Very Liquid ind...