Investors looking for safety from volatile equity markets have piled into bond exchange traded funds.
Taxable-bond ETFs have seen net inflows of nearly $28 billion year to date, according to Morningstar data through September. This is the biggest ETF intake for any asset class. [Skittish Investors Flock to Bond ETFs]
“In the U.S., exchange traded products gathered $4.4 billion in net new assets in September driven primarily by inflows of $5.8 billion into fixed income ETPs reflecting the ’risk-off’ trade,” according to a recent BlackRock update. “Equity ETPs experienced outflows for the second consecutive month, subtracting $1.2 billion in September and $2.3 billion in August.”
Conservative investors like the income and relative stability of bonds. However, Treasury yields are extremely low by historical standards. Bond yields and prices move in opposite directions.
Bond ETFs have low fees and transparency, and the wide variety available in the market allows investors to create a customized approach to fixed-income investing.