Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSE Arca: TTFS) shares recent fund flow trends.
We have read a lot of chatter about bubbles in recent months. We think investors looking for bubbles will find the credit markets a lot more bubbly than the equity markets. Investor appetite for corporate bonds—particularly investment-grade corporate bonds—is seemingly insatiable despite near record low yields and persistently poor performance.
Corporate bond ETFs posted steady inflows in the past year even though the average fund delivered a net price decline in this period. Most recently, Corporate bond ETFs issued $641 million (0.8% of assets) in the past month and $6.2 billion (7.9% of assets) in the past three months. The year-to-date inflow now totals a staggering $21.6 billion (27.5% of assets). It is amazing how eager investors are to lend money to companies at pathetically low yields.
Enthusiasm was much cooler for high-yield debt than for investment-grade debt in the past year. While inflows into High-Yield bond ETFs picked up to $4.0 billion (11.4% of assets) in the past three months, the year-to-date inflow amounts to a mere $3.3 billion (9.4% of assets).
