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Cash Funds seeking Bond ETFs

Cash flowed into bond ETFs this week and out of stock funds!

Clear sign that institutional investors again see fixed-income as a potential haven if the U.S. economy tips into recession this year.

Tweet on Bond ETF cash flow

Creditsights chart on bond etf cash funds

Asset managers often use bond ETFs to rapidly boost or lower exposure to bond markets.

Fixed-income ETFs raked in $7.4 billion in the seven days ending January 4, the highest level in six weeks, while stock ETFs lost $3 billion, according to CreditSights Inc.

Investment firms like Blackrock are calling for corporate bonds to outperform this year because of their relatively high yields and borrowers’ strong balance sheets.

Investment-grade ETFs got $419 million of net inflows after two weeks of outflows and junk bond ETFs took in $138 million. The fund flows coincided with a surge in junk-bond trading on Wednesday, according to CreditSights.

Bond mutual funds experienced outflows, but at a slower pace than in late December, indicating that retail investors may be turning less bearish on the market, which suffered heavy losses last year.



Image:investors funds