Trading spreads tend to be a bit wide with BSCN, and underlying liquidity is lacking for investors interested in block trades.
Not exact matches
However, it has to be
traded with care: while average volume is decent, the
spreads tend to be wide.
Prior research has established that illiquid bonds
tend to have higher
spreads (i.e., greater
trading costs) than liquid bonds.
Spreads will
tend to be narrow if market - makers believe they can execute
trades quickly and cheaply, or if funding and hedging costs are low.
Though institutions often prefer ETFs with larger share prices, due to the potential for tighter
spreads and minimized
trading costs, financial advisors instead
tend to prefer smaller share prices.
Demo accounts often
tend to resemble real world
trading but at reduced
spreads.
A liquid bond ETF
tends to
trade at a
spread of 1 basis point (Source: Bloomberg, as of 6/12/2017).
Trading impact for options is substantially greater, largely because bid / ask
spreads tend to be a substantial percentage of premium value, and also because of the very large notional value which these options represent.
The problem is that robos
tend to include more «esoteric» funds, ones that not only
trade with a larger
spread between bid and ask prices (translation: higher cost to you), but also
trade at a discount or premium to the underlying assets in the ETF (translation: higher costs to you if the manager buys at a premium or sells at a discount to asset value).
A liquid bond ETF
tends to
trade at a
spread of 1 basis point (Source: Bloomberg, as of 6/12/2017).
Prior research has established that illiquid bonds
tend to have higher
spreads (i.e., greater
trading costs) than liquid bonds.