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When stress breaks short term corporate bonds (ERNA ETF)

The current market dislocation provide some opportunities in bonds ETF. Big ETF trade are premium or discount because the underlying bonds are lacking of liquidity.

ERNA is a US corporate investment grade ultra short term bonds trading on the London stock exchange. It is currently quoted $4.9 while the net asset value (NAV) is $5.14. Almost a 5% discount.

As you can see in the capture belows, the portfolio quality is quite high and maturity is ultra short (less than a year in average). It is unlikely that the NAV is wrong so much. The spread over similar US-bonds is higher that for longer dated bonds (LQD). A similar fund (NEAR) have a way smaller discount (but quoted on NYSE, much more liquid).

edit : the discount is decreasing at end of march. NAV is $5.15 and the last price was $5.05. There is no longer any discount on NEAR.

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