Despite the strong rally in the equities market at the start of the year, fixed-income exchange traded funds continue to attract strong inflows, especially after weaker U.S. economic data coupled with Eurozone problems weigh on riskier stocks.
Over April, $5 billion billion in new asset inflows into fixed-income ETFs helped offset the $1.2 billion lost in stock ETFs and $1 billion from commodity ETFs.
“The overwhelming view from almost everyone in my informal survey group was that investors continue to have a strong appetite for fixed income products,” Nicholas Colas, Chief Market Strategist at ConvergEx, wrote in an research note.
In the week ended May 2, taxable bond funds attracted $5.5 billion in assets, with U.S. Treasuries bringing in $1.2 billion, the third largest weekly inflow on record and largest since June 2006, reports Daniel Bases for Reuters. The renewed interest in safe-haven assets helped push the benchmark 10-year Treasury yield to 1.9%. [What to Make of Treasury ETF Strength]
“This shift from equity into fixed income signals to me a little bit of concern in the market and a short-term risk-off mentality,” Matthew Lemieux, analyst at Lipper, said in the Reuters article.
Fund providers are also taking notice of the shift in investment sentiment.