Investors in State Street Global Advisors’ fixed-income exchange-traded funds are moving their money into shorter duration products and senior loan products since the bond market started its selloff last week, said the firm’s global head of ETF capital markets on Tuesday.
“It’s been a busy couple of days. We’ve seen some selling pressure in the fixed-income products,” said Tim Coyne of SSgA, the nation’s second-largest ETF firm, which manages more than 100 ETFs in a broad variety of asset classes. “We have a lot of client questions coming our way on fixed income liquidity and performance. People are looking at how to position their portfolios.”
Coyne said on Tuesday that investors are still looking for yielding investments, including fixed income, but flows into the high-yielding SPDR Barclays High Yield ETF (JNK) have slowed.
Now, he said, SSgA is seeing more flows into shorter duration products such as SPDR BarCap ST High Yield Bond ETF (SJNK) as well as new senior loan products that SSgA launched about eight weeks ago. For example, the actively managed SPDR Blackstone/GSO Senior Loan ETF (SRLN) portfolio has seen $280 million in volume in the last eight weeks.
High-yield stock ETFs’ 2013 gains have vanished due to the bond markets’ rate spike, reported ETFtrends.com web editor John Spence on Tuesday.
“SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) is off 2.5% so far in 2013 and iShares U.S. Preferred Stock ETF (NYSEArca: PFF) is down 1.8%, according to Morningstar,” Spence wrote. “The recent sell-off as Treasury yields surge has resulted in losses of about 6% over the past month for both funds. The ETFs have also dropped below their 200-day moving averages.”
Surprisingly, investors so far in 2013 have remained faithful to fixed income.
In a midyear 2013 SPDR ETF outlook released on Monday, SSgA ETF investment strategy head David Mazza studied ETF asset flows from January through May and found that investors “remain interested in adding to their fixed income exposure through ETFs even as the prospects of future positive total returns are weakening.”