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There seems to be a global massive increase in liquidity being injected in indexed and EFT funds. My knowledge in finance is zero. But hearing about how index
by 1971genocide 11y ago
There seems to be a global massive increase in liquidity being injected in indexed and EFT funds.
My knowledge in finance is zero. But hearing about how indexed funds and EFT funds works it seems to work in reserve to sub-prime mortgages.
Rather and slice debt into hundreds of pieces and and selling it to investors you seems to slice saving into hundreds of pieces and selling it to people who need liquidity.
Could someone with more knowledge tell me why I am completely wrong ? I really do not want to witness another market crash.
- zzalpha 11y agoErr... An index fund is no different than an actively managed fund save that instead of trying to actively rebalance the fund they just buy a basket of stocks or what have you to try and model some index. That fund is just transacting in stocks, bonds, or other assets. The liquidity they might provide is to the broader market by buying and selling assets like any other investor, just doing it with the pool of money provided by fund participants. If you have a problem with that you should be concerned by any fund, actively or passively managed, including mutual funds, hedge funds, etc, as they all operate on the same basic principles.