German Bond ETF Volume Rises as Yields Hit Record Low
May 16th at 9:14am by John Spence
Activity in exchange traded products that invest in German government debt has perked up lately as bond yields scrape record lows with Greece worries sending investors into safe havens.
Germany’s borrowing costs fell to fresh record lows at an auction Wednesday “as the prospect of new elections in Greece and the cash-strapped country’s possible exit from the Eurozone sparked an investor flight to safety,” Dow Jones Newswires reported.
“Clearly the name of the game is the big worries around the crisis in Greece,” said Jean Francois Robin, global head of strategy at Natixis, in the article. [Bond ETFs for Germany]
Benchmark German 10-year yields have plunged to all-time lows around 1.43%, according to a Reuters story.
In fact, German bond yields are so low that at some point investors may end up getting back less than they paid for the debt, according to the report.
Exchange traded products that track German bonds include PowerShares DB German Bund Futures ETN (NYSEArca: BUNL), PIMCO Germany Bond Index Fund (NYSEArca: BUND), ProShares German Sovereign/Sub-Sovereign ETF (NYSEArca: GGOV) and PowerShares DB 3x German Bund Futures ETN (NYSEArca: BUNT), which is a leveraged exchange traded note.
BUNL is small with assets of $32.2 million but trading volume in the ETN has picked up lately. Its total return year to date as of May 15 was 3.9%, according to Morningstar.
PowerShares DB German Bund Futures ETN
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