Bond ETF Assets Rise Nearly 40% in a Year
March 8th 2012 at 9:16am by John Spence
Assets under management in bond exchange traded funds have risen about 38% over the past year to nearly $200 billion, according to a report Thursday.
Investors have been “pouring money” into bond ETFs since 2008, and there are than 170 funds currently listed, according to a Reuters article.
“Investors are beating the bushes for alternatives to low yields on money markets and CDs,” it said. “The buying-binge for bond ETFs has coincided with increased investor demand for corporate debt.”
For example, high-yield ETFs indexed to corporate “junk” bonds such as iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG), SPDR Barclays High Yield Bond (NYSEArca: JNK) and PowerShares High Yield Corporate (NYSEArca: PHB) have been huge sellers this year. [High-Yield Bond ETFs See Record Inflow]
High-yield ETFs recovered somewhat Wednesday following a recent slide. [Popular High-Yield Bond ETFs Stumble]
“The popularity of those ETFs is part of a broad reach for yield and a willingness to move into riskier assets to get it,” said iShares managing director Matt Tucker in the Reuters story. “It also reflects a belief that the U.S. economy is growing at a fast enough pace for companies to be able to service their debt.”
Also, some advisors are using bond ETFs with shorter maturities to play defense against the risk of rising rates.
“The short-term ETFs allow me to tailor the yield curve on my bond investments and reduce risk,” said John Largent, chief investment strategist at Members Trust.
SPDR Barclays High Yield Bond
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.