May 12, 2020
By Ben Winck
The Federal Reserve announced Monday (click here) that it will begin buying corporate-debt exchange-traded funds on May 12 to further aid markets buffeted by the coronavirus pandemic.
The ETF purchases were first announced on March 23, when the central bank unveiled its Secondary Market Corporate Credit Facility alongside a spate of emergency lending pools. Though the program's reveal was enough to lift credit stresses, markets have been eagerly anticipating its rollout as firms grapple with the pandemic's economic toll.
The facility will buy up funds "whose investment objective is to provide broad exposure to the market" for corporate debt, the Fed said in a Monday statement. Direct purchases of corporate bonds through a separate facility will begin "in the near future," the authority added....
March 16, 2020
By James Chen
What Is an ETF? (click here)
An exchange-traded fund (ETF) is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies. ETFs are in many ways similar to mutual funds; however, they are listed on exchanges and ETF shares trade throughout the day just like ordinary stock.
Some well-known example is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index. ETFs can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types. An exchange-traded fund is a marketable security, meaning it has an associated price that allows it to be easily bought and sold....
