Government Bond ETFs See Record Inflows on Safe-Haven Trade
June 6th, 2012 at 3:02pm by John Spence
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.
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.