In recent weeks, several bond exchange-traded funds (ETFs) have experienced a significant surge in inflows, indicating a heightened interest among investors.
This shift coincided with a market that significantly upped bets on Federal Reserve rate cuts for 2024, backed by a robust and ongoing disinflationary trend in the U.S. economy.
Speculators have gone as far as factoring in an initial rate cut as early as March 2024, with whispers of a total of five rate cuts by December 2024.
But which bond ETFs are currently piquing investors’ interest?
From ‘Cash-Like’ to ‘Equity-Like’
While the third quarter in 2023 witnessed a notable uptick in inflows into cash-linked bond ETFs, primarily those investing in short-dated Treasury bonds and bills, the latest trends are veering towards more aggressive fixed-income strategies.
Investors are strategically positioning themselves in anticipation of an imminent U-turn in Fed’s monetary policy stance, eyeing a select group of bond ETFs that have weathered the storm during the recent spate of interest rate hikes.
Their bullish stance on riskier bond ETFs underscores a burgeoning belief that the bond market landscape could undergo a substantial recalibration in the coming months, as they brace for a more accommodating monetary policy environment.
These ETFs encompass a diverse range, including long-term Treasury bonds, emerging-market bonds, and high-yield corporate bonds.
Top 10 Bond ETFs by Fund Inflows in the Past Month
| Name | Fund Flows (1-month) |
|---|---|
| iShares Trust – iShares iBoxx $ High Yield Corporate Bond ETF HYG | $3.69 bn |
| iShares Trust – iShares Core U.S. Aggregate Bond ETF AGG | $2.62 bn |
| SPDR Series Trust – SPDR Bloomberg High Yield Bond ETF JNK | $1.99 bn |
| iShares Trust – iShares J.P. Morgan USD Emerging Markets Bond ETF EMB | $1.89 bn |
| iShares Trust – iShares 20+ Year Treasury Bond ETF TLT | $1.62 bn |
| Vanguard Bond Index Funds – Vanguard Total Bond Market ETF BND | $1.56 bn |
| iShares Trust – iShares Broad USD High Yield Corporate Bond ETF USHY | $1.31 bn |
| Vanguard Scottsdale Funds – Vanguard Long-Term Treasury ETF VGLT | $665.99 bn |
| Vanguard Charlotte Funds – Vanguard Total International Bond ETF BNDX | $641.06 bn |
| iShares Trust – iShares 5-10 Year Investment Grade Corporate Bond ETF IGIB | $216.67 bn |
Read Now: Gold’s Record High: Why Haven’t Gold Miners Followed Suit?
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
