With fears running high that the Federal Reserve could soon hike interest rates, flows to fixed income ETFs have cooled.
“Fixed income flows overall were flat and have been volatile with investors uncertain as to when rates may begin to move higher. Pockets of strength persist, including U.S. investment-grade corporate funds, which gathered $0.9bn, and EM debt, which added $0.5bn to bring year-to-date flows to $3.2bn. But U.S. Treasury funds shed $2.8bn. Year-to-date fixed income flows remain ahead of the record pace established last year, driven by investment grade and high yield corporate bonds,” notes BlackRock.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) is the only bond ETF among this year top 10 asset gatherers. While no bond ETFs are on the list of 10 worst outflow offenders, the iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) and the iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) have shed $641.5 million and $1.3 billion, respectively, this year.
Chart Courtesy: BlackRock
Tom Lydon’s clients own shares of EEM, LQD and TLT.