Business

Bond ETF inflows fall to lowest level since pandemic start

Interested in ETFs?

Our Visit ETF Center for news and investor education, market updates and analysis, and easy-to-use tools to help you choose the right ETF.

Investors are turning away from bond-traded funds amid worries about inflation, with investment flows falling to their lowest levels since the start of the Covid-19 pandemic.

The bond ETF saw global net inflows of just $14 billion in November, according to data from BlackRock affiliate iShares.

Many traditional corporate bond ETFs and high-yield bonds will do even worse, with investors increasingly seeking to insulate themselves from the ravages of rising prices through bonds related to high-yield bonds. inflation or short-term government debt, iShares found.

An unusually high 37% of fixed income flows poured into inflation-linked bonds in November, while government debt funds – often focused on China – accounted for an additional 44%, making corporate bonds , especially high-yield bonds, are excluded from the cold.

“[There has been a] change the mixture according to the ratio [sovereign bonds], related to inflation and China [government bonds]“, said Karim Chedid, head of investment strategy at iShares in the Russia region. “We see them continuing to be an important driver into 2022 because of the need to hedge against inflation and seek income.

“Investors are showing a preference for shorter maturities, while corporate bonds” have seen buying slow and high yields have seen some outflows,” said Chedid, although he said there are already signs that Europeans are starting to buy discounted corporate bonds. in early December.

Column chart Inflation Inflation and Sovereign Bond ETF as % of total fixed income showing Safe First

“This is the year of stocks,” said Jose Garcia-Zarate, vice president of passive strategic research at Morningstar.

“[There have been] A few are flowing into fixed-income markets, mainly directed at short-term debt and linked to inflation in anticipation of central banks’ actual rate hikes in 2022. There is little price to pay. value in developed fixed-income markets,” added Garcia-Zarate.

China is an exception to the general gloom in sovereign bond ETFs. “The Chinese bond market has been further opened to international investors. It has become a very attractive place, simply because of the returns they offer compared to developed markets,” he said.

“Having good credit quality. You know the Chinese government will pay you back. The broad emerging market bond indexes have lost money this year. China has made a significant amount of money.”

Several ETF providers have benefited from this trend with the $12.1 billion iShares China CNY Bond Ucits ETF (CNYB) became the second largest fixed income ETF in Europe just two years after its launch.

Matthew Bartolini, head of research SPDR Americas at SSGA, agreed that the rotation is characterized by outflows from traditional high-yield corporate and bond ETFs into securities that are regulated. protected by the US Treasury Department (Tip), saw their second-highest monthly cash flow in November, just as much as October, and for senior lending ETFs, which have a low interest rate well known and ranked high in the capital structure of companies.

However, Bartolini noted that fixed income remains “on track for more than $200 billion in inflows this year. It will be the second year in a row and this has never happened before.”

Data from ETFGI, a consulting firm, shows a net inflow of $211 billion into bond ETFs in the first 11 months of 2021, matching last year’s record, albeit a fraction of the 789 billion dollars that the equity ETF has attracted.

Click here to access the ETF Center

Source link

news7h

News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button