Government bond ETFs listed around the globe attracted record-breaking purchases of $5.6 billion in May driven by flows of $4.4 billion into U.S. Treasury funds, according to industry data.
“Demand for assets perceived as lower-risk pushed yields on benchmark 10-year U.S. Treasury bonds to record lows. Beyond the U.S., yields on 10-year German bunds and U.K. gilts also fell to record lows,” according to a report released by BlackRock on Wednesday.
The previous monthly high for government bond exchange traded products was $3.6 billion set in June 2010. [German Bond ETFs Rally as 2-Year Yield Hits Zero]
Nervous investors have pumped over $30 billion into fixed-income exchange traded products so far this year. Worries over Europe’s debt crisis and the global economy recently pushed yields on the 10-year Treasury note under 1.5% to all-time lows. [Will ‘Mad Rush’ to Bond ETFs End in Tears?]
Overall, the global ETP business gathered inflows of $19.2 billion in May, according to BlackRock, which oversees the iShares ETFs.
“Year-to-date inflows of $85.3 billion through May 2012 are running 18% ahead of 2011’s comparable total of $72.4 billion. Fixed income flows continue to break historical records scaling to a new high of $36.5 billion for the January-May period, and 148% higher,” BlackRock said.
Bond ETPs have attracted net inflows for 17 straight months.
Within the fixed-income category, global investment-grade corporate bond ETPs brought in net flows of $1.7 billion last month, bringing YTD inflows to $12.2 billion. Also, investors reduced their exposure to high-yield bond ETPs, taking out $1.3 billion, the first monthly outflows since November 2011, according to the report. [Sell-Off Pushes Junk Bond ETFs to Discounts]
Meanwhile, commodity funds in May saw outflows for a second month and gold ETPs shed $1.5 billion.