While equities markets were stuck within range and yields on benchmark Treasury notes slipped, investors plunged back into investment-grade corporate bonds and related exchange traded funds.
For instance, in the week that ended January 11, investment-grade corporate bond funds attracted $4 billion in net inflows, marking the funds’ largest inflows since early February 2015, Reuters reported.
Among the most popular ETF trades of the past month, the Vanguard Intermediate-Term Corporate Bond ETF (NYSEArca: VCIT) attracted $1.6 billion in net inflows and iShares iBoxx $ Investment Grade Corporate Bond ETF (NYESArca: LQD) brought in $1.4 billion, according to XTF data.
“The relatively strong stability and income investment-grade corporate bonds provide are particularly appealing amid the uncertainty that has materialized to start the year,” Todd Rosenbluth, director of ETF & Mutual Fund Research at CFRA, told Reuters.
Safe-haven demand for fixed-income assets returned in January as investors grew wary of the recent Trump-induced rally in equities that pushed stocks to record heights. Many waited on further clarification from President Donald Trump’s administration on policy changes to justify the heightened valuations. However, some of Trump’s actions or lack of clarity triggered some risk-off action.