Fixed Income ETFs See $55B in Inflows Thus Far this Year

Gold can’t have all the safe haven fun—bonds have been seeing their fair share of safety capital during the pandemic, especially with the central government stepping in to inject more capital into debt issues. According to CFRA Research, fixed income ETFs took in $55 billion thus far this year, which is equal to a 42% share of the industry’s net inflows, and higher than the $47 billion for capital flowing into equities.

In fact, investor demand in 2020 has been more than double the category’s share of ETF assets, CFRA Research noted. ETF investors looking to get in on the action can look at the iShares iBoxx $ Investment Grade Corp Bd ETF (NYSEArca: LQD).

“CFRA’s Focus ETF for June is five-star rated iShares $ iBoxx Investment Grade Corporate Bond ETF (LQD), which has been the most popular fixed income fund in 2020,” CFRA said in an email. “While the Federal Reserve began purchasing ETFs in May, demand for LQD has stemmed primarily from traditional investors seeking stable income by taking on modest credit risk.”

Additionally, here are a pair of investment-grade corporate bond options:

  • Vanguard Short-Term Corporate Bond ETF (NASDAQ: VCSH): VCSH tracks the performance of a market-weighted corporate bond index with a short-term dollar-weighted average maturity–the Bloomberg Barclays U.S. 1-5 Year Corporate Bond Index. VCSH debt holdings mirror those found within the index, so U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by the industrial, utility, and financial companies comprise the debt portfolio. Furthermore, in order to curb volatility in the bond markets, maturities are relatively short-duration issues–between 1 and 5 years until maturity.
  • SPDR Portfolio Short Term Corp Bd ETF (NYSEArca: SPSB): SPSB seeks to provide investment results that correlate with the Bloomberg Barclays U.S. 1-3 Year Corporate Bond Index. Once again, O’Leary would benefit from the reduced exposure to volatility with SPSB’s investment in shorter-duration debt with maturities less than three years. In addition, SBSP minimizes credit risk by constructing a debt portfolio that contains only investment-grade bonds with companies that are less likely to default.

Investors looking to get in on the corporate bond action, they can consider the Goldman Sachs Access Investment Grade Corporate Bond ETF (GIGB). GIGB seeks to provide investment results that closely correspond to the performance of the FTSE Goldman Sachs Investment Grade Corporate Bond Index.

The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index. The index is a rules-based index that is designed to measure the performance of investment-grade, corporate bonds denominated in U.S. dollars that meet certain liquidity and fundamental screening criteria.

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