Investors Favor Bond ETFs Over Stock ETFs for 3rd Straight Month

Investors sought shelter in bonds over stocks in April on the heels of equity volatility and interest-rate fears.

More than $14 billion was added to U.S.-listed exchange-traded debt funds last month, the most since October 2014, according to Bloomberg Intelligence data. That’s the third consecutive month that funds holding bonds attracted more cash than their stock counterparts — the longest streak since at least May 2011.

With duration fears taking hold, investors favored short-term U.S. government debt, sinking $2.3 billion into an iShares ETF that holds Treasury bonds with remaining maturities of between one month and a year, the most since January 2016.

“The big month for fixed-income flows is mostly a reaction to the stock market’s increasing weakness — as well as fear of rising rates — as the bulk of the cash went to ultra-short term debt ETFs,” said Eric Balchunas, an ETF analyst for Bloomberg Intelligence.

Interest-rate risk also guided corporate-debt exposures, with investors allocating a record $1.3 billion to the iShares Floating Rate Bond ETF. Another iShares ETF, which is focused on company debt and aims to protect against rising rates, took in a record $111 million.