Last month marked the official start of summer, and while the majority are flocking towards activities to take advantage of the warmer weather, they’re also moving into markets that are heating up, such as fixed-income ETFs.
According to data from State Street, a substantial number of investors flocked to bond ETFs–while equity and commodity ETFs posted net outflows $5.8BN and $2.1BN respectively in June, fixed income ETFs attracted $7.4BN of inflows during the month. This officially marks the 35th consecutive month of inflows for bond ETFs.
Related: The Short End of it With an Active Bond ETF
Invesco Sees Opportunity in Fixed-Income Inflows
With the exodus of investors from high yield debt, investment management companies like Invesco are quick to offer ETF solutions that appease the appetite for yield, but at the same time, reduce potential risks.
“Despite the outflows, fundamentals in the high yield market appear strong,” Tim Urbanowicz, Senior Fixed Income ETF Strategies at Invesco told ETFTrends.com. “So far in 2018, we are seeing many investors rotating out of traditional high yield vehicles and into defined maturity ETFs in the Invesco BulletShares suite.”
Invesco offers high-yield fixed-income ETFs with their BulletShares Corporate Bond Portfolios and for investors, the BulletShares High Yield Corporate Bond Portfolios. In addition to the higher yield, the ETFs also carry interest rate hedging since the bonds are typically held until maturity.
“By using defined maturity high yield ETFs like the Invesco BulletShares High Yield ETFs, investors are able to capitalize on the incremental carry offered by high yield, but potentially reduce the impact of spread widening or rising rates if they occur as the bonds are typically held to maturity,” said Urbanowicz.