> I haven't seen anything in the financial press to explain the sudden drop in NAV across short duration bond ETFs last month. These funds should be safe like money markets

not safe like cash at all. only .7% US govt bonds. mostly holding BBB rated commercial paper. larger share of holdings in "other" than in govt bonds

maybe a bitcoin exchange somewhere went under or something. maybe they were on the wrong end of some sort of credit swap.

VNLA holdings:
US Government    0.70%
AAA    1.16%
AA    2.92%
A    43.70%
BBB    52.56%
BB    0.49%
B    0.00%
Below B    0.00%
Other    -0.82%

wrote:

not safe like cash at all. only .7% US govt bonds. mostly holding BBB rated commercial paper. larger share of holdings in "other" than in govt bonds

maybe a bitcoin exchange somewhere went under or something. maybe they were on the wrong end of some sort of credit swap.

VNLA holdings:
US Government    0.70%
AAA    1.16%
AA    2.92%
A    43.70%
BBB    52.56%
BB    0.49%
B    0.00%
Below B    0.00%
Other    -0.82%

wrote:

This is fascinating indeed.gif — the data tells a very clear story. The two columns "Market Value" and "Current Market Value" let us see exactly where the losses occurred. Here's the picture:

**The losses were broad-based, not concentrated in a single position.** Virtually every holding in the portfolio declined — 301 out of the ~305 bond positions posted losses, totaling about **$23.7 million** in mark-to-market decline. No single position "blew up."

**The biggest dollar losers** were the largest positions that happened to have moderate percentage losses:

| Ticker | Position | Dollar Loss | % Loss |
|--------|----------|------------|--------|
| PTSB | Permanent TSB (Irish bank) | -$588K | -4.50% |
| AER | AerCap (aircraft leasing) | -$587K | -2.85% |
| MOLX | Molex Electronics | -$510K | -1.96% |
| MS | Morgan Stanley | -$468K | -1.06% |
| BA | Boeing | -$442K | -2.52% |
| ATWALD | Atlas Warehouse Lending | -$434K | -1.78% |
| LPLA | LPL Holdings | -$408K | -1.74% |

**By sector, banks took the biggest aggregate hit** at -$5.0M across 36 positions, followed by auto/transport at -$3.8M across 35 positions. This makes sense — financials and autos were the sectors most directly exposed to tariff uncertainty and credit spread widening.

**The key takeaway** is that this confirms what we discussed about PULS: the NAV decline wasn't caused by one or two positions going bad. It was a uniform, market-wide repricing of credit spreads that hit every single corporate bond in the portfolio by roughly 1-3%. When spreads widen, everything with credit risk moves together. The fund was essentially marking down its entire book by about the same amount — the classic "spread widening" pattern.

This is actually somewhat reassuring from a credit quality perspective — there's no hidden landmine in these portfolios. But it also means you can't diversify away from the risk within the fund. The only hedge is to not hold credit risk at all (i.e., move to Treasury-only).

Interesting post, but what is the source?