BlackRock pitching long-short ETF trades as cash alternative

Investors turning to ‘cash-and-carry’ approach using exchange-traded funds

BlackRock

Asset managers in Europe are using exchange-traded funds (ETFs) to execute so-called cash-and-carry trades as a way to store cash without incurring negative returns.

BlackRock recently helped a client put on a several hundred million dollars' trade using an ETF to go long on an index while simultaneously selling futures to short the index. The trade has positive carry because futures are trading rich to fair value, saving the client almost 40 basis points compared with Eonia, according to Patric