The commentary addresses the question from Beatriz, a listener who is considering investing in fixed income ETFs but is concerned about the smaller size of these funds compared to other ETFs available in the market.
Expert Marcelo d'Agosto explains that an ETF is an investment fund traded on the Stock Exchange. Generally speaking, investing in or redeeming from an exchange-traded fund depends on finding another investor willing to make the opposite operation, meaning buying from someone who wants to sell and selling to someone who wants to buy.
According to the expert, this dynamic makes liquidity an important factor for this type of investment. However, ETFs have a differentiated mechanism that sets them apart from other exchange-traded funds.
The article explains that ETFs can increase or decrease in size through the action of financial institutions that act as intermediaries. Thus, if an investor wants to buy shares of a Treasury bond ETF but there is no one willing to sell, a financial institution can intervene in the market to carry out the operation.
