Why fixed income ETFs saw a major outflow last week


Nov. 22 2019, Updated 6:52 a.m. ET

Outflow from high yield bond ETFs

High yield bonds (JNK) were some of the worst-performing funds, with $329 million in outflows. The SPDR Barclays High Yield Bond (JNK), seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Barclays High Yield Very Liquid Index.


Fund flows into Treasury ETFs remained subdued, with no Treasury ETF appearing among the top gainers or losers except the iShares 1-3 Year Treasury Bond ETF (SHY), which was the ninth worst-performing ETF. With improvements in the economy, Treasury securities become a less attractive investment proposition, as investors seek higher risk-adjusted returns by investing in asset classes such as equities. This reflects in Treasury yields remaining largely flat over the past week after falling in reaction to the minutes of the FOMC’s March meeting.

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The broad-based Vanguard Total Bond Market ETF (BND) gained $65 million. The Vanguard Total Bond Market ETF (BND) invests in over 300 bonds mirroring the U.S. investment-grade bond market. Its holdings include Treasuries, municipal bonds (MUB), and corporate bonds. The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) gained $47 million during the week.

To learn about how the world economy has affected fund flows for equity ETFs over the past month, read on to Part 5 of this series.


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