Bond Yields Bring on Assets for Bond ETFs
July 15th at 1:03pm by Tom Lydon
The boom in bond yields for June was a blessing for the new fixed-income exchange traded funds (ETFs). ETF-focused bonds acquired $1.03 billion in assets, bringing the total to $25 billion, reports Lawrence Carrel for TheStreet.com. This was the largest percentage increase for ETFs besides international focused funds. Yields rose above 5% on inflation fears and concern U.S. Treasuries aren’t appealing to foreign investors.
iShares Lehman 20+Year Treasury Bond Fund (TLT) average daily volume rose sixfold to 3 million shares per day, however it is down 2.8% year-to-date. iShares Lehman 7-10 Year Treasury Bond Fund (IEF) had an increase in volume of 82%. IEF is down 0.3% for the year. The volume for iShares Lehman U.S. TIPS Bond Fund (TIP) increased 39% and it is up 1.3%.
These relatively new funds aren’t widely used by investors yet. They make up 10% of the total $500 billion ETF market, reports Michael Pollock for The Wall Street Journal. Enthusiasts of the bond fund market like the transparency allowed for the fixed-income products.
