ETFs Are Proving a Double-Edged Sword in a Normally Staid Market

This month’s panic-driven selling across municipal bonds — fueled by the boom in ETFs — is proving a mixed blessing for investors in a normally sedate market corner.

As the tariff-spurred turmoil erupted in recent weeks, money managers navigated the immense selling pressure via exchange-traded funds, which lived up to their billing as efficient vehicles for price discovery. That’s a boon in an asset class where some securities can go months without trading.