As investors continue to watch the dollar fall in value and fear inflation, bond exchange traded funds (ETFs) have been the beneficiaries of this economic situation.
John Spence of Market Watch said that taxable bond ETFs brought in the biggest gains in assets in September. Year-to-date, taxable bond ETFs have brought in about $26.7 billion of new assets, which makes it the most popular ETF category so far in 2009. (How to use ETFs to diversify away from the dollar).
Not all bond ETFs are created the same. The iShares Barclays TIPs Bond ETF (NYSEArca: TIP) has been one of the most popular, doubling in size to boast nearly $16 billion in assets. What makes TIPS so attractive is that they enable investors to hedge against inflation because their returns are based on the rate of inflation. (How TIPS work).
Other TIPS ETFs include:
- PIMCO Broad U.S. TIPS (NYSEArca: TIPZ)
- PIMCO 15+ Year U.S. TIPS (NYSEArca: LTPZ)
- PIMCO 1-5 Year U.S. TIPS (NYSEArca: STPZ)
- SPDR Barclays Capital TIPS (NYSEArca: IPE)
Another class of bond ETFs that has seen nice growth is investment-grade corporate bond ETFs. Take a look at the iShares iBoxx Investment Grade Corporate Bond Fund (NYSEArca: LQD), which has about $13 billion in assets, a yield of 5.3% and is up 8.3% year-to-date.
In addition to bond ETFs seeing growth and an inflow of assets, commodity ETFs and emerging market ETFs have as well, thanks much to risk appetite coming back into the marketplace. (Five ways to fight inflation with ETFs).
For more stories on bond ETFs, visit our bond ETF category.
For full disclosure, Tom Lydon’s clients own shares of LQD.
Kevin Grewal contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.