Much attention has been drawn to the lack of liquidity in fixed income markets over the past six months. One of the areas of specific focus has been the high yield exchange traded fund (ETF) space. There is no question that the full implementation of the Volcker provision inside Dodd-Frank and further bank regulation known as the Basel Accord (Basel 2.5 and 3 in this case) has reduced market making in non-investment grade bonds and loans. These concerns have garnered a great deal of media attention and unfortunately caused some investors to flee the asset class in a panic. This is both unfortunate and, in our opinion, the wrong thing to do, especially at this time. The fact is, we have rarely seen a larger liquidity premium (bonds trading at big discounts to call or maturity prices) being paid to investors and we encourage them to take advantage of it. We are adjusting our own portfolio to address some of these liquidity concerns. Click here to read more on our market thoughts and strategy.