ETF Investors Are Hedging Bets with Long-Term Treasuries

“It’s very much focused on what you believe, if you really believe this trade war is going to happen, there’s going to be a problem,” Zaccarelli told Bloomberg, projecting a flight to quality in this scenario. “Potentially they think the trade war is going to be what pushes the economy into a recession. There’s this fear that the U.S. expansion is going to stop.”

Other yield-generating ETF bets have also seen increased investment interest as investors bet on a low-rate environment in response to heightened market volatility ahead.

For instance, the SPDR Dow Jones REIT ETF (NYSEArca: RWR) saw $82 million in creations on Tuesday alone, the most in one day since January 2016 while the Real Estate Select Sector SPDR Fund (NYSEArca: XLRE) added $122.8 million in inflows on Wednesday, the most since February, according to Bloomberg data.

“REIT investors got confident that this was the level, and that REITs could work with rates at this level,” Bloomberg Intelligence analyst Jeffrey Langbaum said.

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