Corporate Bond ETF Takes In Record $1.1 Billion in One Day

Bond funds are gaining favor as investors seek exposure to credit assets amid record-low yields on government debt. Growth has also been stimulated by a loss of faith in active managers and deteriorating trading conditions in credit markets. 

“As yields go lower and lower globally investors are looking for every bit of incremental yield, whether investment-grade, high-yield, or even dividend stocks,” said Peter Tchir, head of macro strategy at Brean Capital LLC. “IG has the additional ‘safety’ advantage which is a benefit as we are at all-time highs in the S&P 500 and have the lowest treasury yields in recent memory.”

Growth of bond ETFs has also been supported by investors seeking stability “in light of heightened volatility and a high level of geopolitical uncertainty,” said David Mazza, head of ETF and mutual fund research at State Street Global Advisers in New York. ETFs have emerged as a popular choice among investors seeking to navigate the market rout following Britain’s vote to leave the European Union.

— Related on ThinkAdvisor:

• Fixed Income, Commodity ETFs Gathered Record Net Inflows in April
• Treasury Yields Hit Record Lows; Strategists Warn Against Chasing Yield