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Understanding ETF Risk Exposure in a Time of Crisis

Exchange-Traded Funds (ETFs) have seen a boom over the past several years. However, with the market turmoil caused by the coronavirus pandemic, some of the challenges of managing ETFs are coming to the fore.

One particular area of concern lies in ETF pricing. With stock prices in a period of intense dynamism, some asset managers are experiencing extreme pricing dislocation whereby the gap between the closing price of ETFs and the net asset value (NAV) of the fund widens significantly. In conditions such as these, the task of understanding pricing and risk exposure becomes more important than ever.

John Lanaro, Global Head of ETF data at RIMES, explains: “In current circumstances, high-quality ETF data really proves its value. Importantly, this data needs to be accurate and granular, right down to the holdings level. Without holdings-level data, asset manages won’t be able to truly understand what stocks and bonds are in their ETF wrapper nor, importantly, how these are priced and what their risk profile looks like – questions that are going to come up time and again over the coming months.

“Firms therefore need to increase their ability to look into their ETFs, and fast. RIMES can help in this regard. We provide full global coverage of ETF data, which extends down to the holdings level. Importantly, our service is based on direct relationships with ETF issuers allowing us to assure the quality and delivery of the data. Our service means firms can understand their true economic exposures and fund performance – critical during market volatility.”

Contact RIMES to find out how we can help you streamline ETF data capture, eliminate costly internal processes and enable daily exposure insight, aggregation and reporting.

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