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FLASH CRASH

It’s alive! ETFs as Frankenstein

AP Photo/Michael Probst
  • Elizabeth MacBride
By Elizabeth MacBride

Journalist

Mark Stys had warned his client about the biomedical/pharmaceutical ETF called PJP—not because the stocks in it were a bad bet, but because the ETF was small and some of the stocks were thinly traded. 

“Our warning was: ‘There’s not enough liquidity in the ETF,’” Stys, a financial advisor in Northern Virginia who manages about $130 million in assets for clients, remembers saying. 

The client did some trading on his own, and bought it anyway. PJP, run by Invesco, was based on an index holding 25 stocks, including some big companies (Eli Lilly and Amgen, for instance) and some smaller ones. 

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