Institutional investors bond over fixed-income ETFs

Smart money favours high-yield and emerging markets debt

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ETFs providing alternatives to over-the-counter bonds

Exchange-traded fund (ETF) providers are cheering the growing use of bond ETFs as European institutional investors seek cheaper and more liquid alternatives to over-the-counter bonds. ETFs tracking high-yield and emerging markets bonds are proving popular for sophisticated investors looking to maintain their fixed-income exposure while avoiding a mark-to-market hit when interest rates rise. But there is growing awareness among ETF issuers of the challenges and risks that come from providing i