“Fixed income ETFs are still a draw, even if they aren’t playing to sell-out houses as they were in Q1 2014. For the second quarter thus far, their inflows total $6.9 billion. Double that for a theoretical Q2 run rate of $14 billion and it is a small downtick from Q1’s $18 billion. Still, for an asset class that was left for dead by the side of the road in late 2013, the Good Samaritan of slow economic growth and deflationary worries has clearly put the bond market back in favor with many investors,” notes Colas.
With $2.2 billion in second-quarter inflows, the iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) is the top asset gatherer among bond ETF, but investors’ affinity for bond funds has not been limited to Treasury plays. [Inverse Treasury ETFs: A Bad Bet]
Capital is returning to emerging markets and municipal bond ETFs. For example, the iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEArca: EMB) and the PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY) have combined second-quarter inflows of almost $230 million while the Market Vectors High Yield Municipal Index ETF (NYSEArca: HYD) has pulled in $146 million.
iShares 7-10 Year Treasury Bond ETF
Tom Lydon’s clients own shares of EEM, EMB, SPY, QQQ andHYD.