Last week we saw increased trading volume and subsequent redemption activity in two notable fixed-income exchange traded funds that invest in U.S. Treasury bonds.

The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) and iShares Barclays TIPS Bond (NYSEArca: TIP), which tracks Treasury Inflation-Protected Securities, saw outflows around $537 million. [Gold, Treasury ETF Outflows]

Last week we also highlighted a large increase in volume in iShares Barclays MBS Bond Fund (NYSEArca: MBB), which invests in mortgage-backed securities. Based on the resulting creation activity and inflows of over $200 million into the fund, it was clear that there was heavy buying in this case. [Mortgage-Backed Securities ETF]

In speaking to some portfolio managers that are active in the ETF space, they believe that large institutional managers have been making a tactical shift away from TIPS and Treasury bonds and into mortgage-backed bonds.

Some note that it is no coincidence that this occurred around rumors circling last week about a potential JP Morgan (NYSE: JPM) merger with Bank of America (NYSE: BAC).

Bank of America has heavy exposure to the mortgage-backed bond market due to its acquisition of a giant in that space, Countrywide Financial, a few years back in the midst of the subprime crisis.