Dr. Saeid Hoseinzade
Assistant professor of Finance at Sawyer Business School, Suffolk University
The liquidity transformation of mutual funds and exchange-traded funds (ETFs) is examined as a potential source of corporate bond market fragility. Greater exposure to plausibly exogenous outflows from ETFs significantly increases a bond’s yield spread for seven months compared to same‑issuer bonds. The impact of active and index mutual fund outflows is insignificant, except for a one‑month effect from exposure to active funds with fewer liquid assets. The differential flow-driven pressure results are attributed to short-term positive feedback strategies by ETF investors and impaired arbitrage propagating secondary ETF market shocks. ETFs also exacerbate first-mover incentives among active mutual fund investors.
Saeid Hoseinzade is an assistant professor of Finance at Sawyer Business School, Suffolk University. He received his Ph.D. in Finance from Boston College.
His research focuses mainly on asset management and fixed income securities. He also does consulting in FinTech.