U.S. Bond ETFs Find Support from Foreign Yield Hunters

For instance, back in 2015, Japanese investors turned to international fixed-income ETFs for yields overseas ahead of the Bank of Japan’s decision to diverge its monetary policy from that of the U.S.

“Variable rate differences across countries and durations mean you need a nimble instrument to shift through fixed-income asset classes,” Geir Espeskog, head of BlackRock’s ETF business iShares Asia Pacific distribution, said.

BlackRock pointed to $2.5 billion of inflows from Asian institutional investors into fixed-income ETFs over the first quarter alone, compared to $3.8 billion from the group for the whole of 2017.

“The income component of fixed income products is what larger institutions are looking for when judging the risk-versus-return dynamic,” Chris Pigott, Brown Brothers Harriman (BBH) senior vice-president and head of Hong Kong ETF services, told SCMP. “There is definitely interest here in bringing new fixed income products to the market to tap this demand.”

For more information on the fixed-income market, visit our bond ETFs category.