With global central banks pushing the limits of quantitative easing and traditional monetary policies, U.S. bond exchange traded funds are experiencing record inflows as investors search for dwindling sources of yield.
U.S. fixed-income ETFs attracted over $60 billion in net inflows this year – that’s already more than the total for 2015, the Financial Times reports.
As loose monetary policies around the world push yields on almost $13 trillion in global bonds below zero, international investors have increasingly turned to the higher relative yields on U.S. government and corporate debt, which has fueled demand for U.S. bond-related ETFs.
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“With five months to go we are already at record inflows for the whole year,” Sebastian Mercado, an ETF strategist at Deutsche Bank, told the Financial Times.
For instance, asset flows into large bond ETFs year-to-date, such as the iShares Core U.S. Aggregate Bond ETF (NYSEArca: AGG), which tracks the Barclays Aggregate Bond Index, have outstripped flows to larger equity ETFs. AGG saw $8.7 billion in inflows so far and is the second most popular U.S.-listed ETF play this year.