Yield-starved investors remain enthusiastic about iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSEArca: LQD) and other investment-grade corporate bond ETFs.
Fueling the increased demand for debt assets, tumbling yields on safer government and corporate debt pushed investors towar riskier and higher yielding debt, like junk bonds. Furthermore, U.S. corporate bonds are enjoying a stronger tailwind in an environment of strong economic growth, healthy earnings and dropping default rates.
“With talk of tax reform swirling around Washington again, U.S. corporate-bond ETFs posted leading net inflows in the two weeks ended Oct. 4, while Treasury ETFs lost assets as investors sought better returns elsewhere,” reports Bloomberg. “Long-term bond funds, too, had outflows as investors lost some of their appetite for interest-rate risk and cut back on bets with higher durations.”
For the week ended Oct. 17th, investors added $654.1 million to LQD, a total surpassed by just two other ETFs. Year-to-date, LQD has added $10.5 billion in new assets. Only five ETFs have seen larger inflows.
The Vanguard Intermediate-Term Corporate Bond ETF (NYSEArca: VCIT) has also been a prolific asset gatherer, adding $6.9 billion in new assets. That puts VCIT tenth among all ETFs in terms of assets added this year.