A Rush Into a Big Corporate Bond ETF

The iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) is already the largest investment-grade corporate bond exchange traded fund and it got bigger as investors flocked to the ETF last week.

Yield-starved investors have been flocking to corporate bond ETFs as a result of the recent fall off in global yields, which has made yields in U.S. assets relatively more attractive – some $12 trillion in global debt now trades with negative yields.

Related: U.S. Corporate Bond ETFs Among Few Attractive Investment-Grade Options Left

“To get a sense of the momentum, take a look at LQD. The iShares iBoxx Investment-Grade Corporate Bond ETF, or LQD, as it’s also known, is the world’s second-largest bond ETF and it took in $1.1 billion of new funds on Thursday. That’s its biggest daily inflow ever and the largest ever recorded for a corporate bond ETF, according to data compiled by Bloomberg,” reports Alastair Marsh for Bloomberg.

Big inflows into LQD this month come after investors poured into investment-grade and junk bond ETFs in June. Specifically, iBoxx backed ETFs experienced a record $27.6 billion of exchange traded volume in June, and the assets under management of iBoxx-benchmarked ETFs now stand at a record $107 billion.


Foreign yields are being depressed by stimulus measures employed by global central banks, such as the Bank of Japan and the European Central Bank, which began buying investment-grade corporate bonds as a part of its quantitative easing program to stimulate the Eurozone economy.