After two back-to-back months of outflows, U.S. equity ETFs are staging a comeback, but fixed income ETFs are the investment of choice.
They attracted $15.3 billion in inflows in April, the second highest monthly inflows ever recorded — only the $17 billion record in October 2014 was greater — while equity ETFs attracted $10 billion following two straight months of outflows, according to State Street Global Advisors. It was the third consecutive month that fixed income inflows outpaced equity inflows, and active bond ETFs accounted for almost two-thirds of bond inflows.
(Related: US ETFs Bleed Assets 2 Months Running)
Commodity ETFs trailed both asset classes, with inflows of nearly $2.3 billion — three-quarters of which moved into precious metals.
While investors weren’t avoiding risk in April they appear to be trying to temper it. In addition to investing in more in bond funds than equity ETFs and in precious metals ETFs they favored government and investment-grade bonds over all other fixed income funds.
Government bond ETFs attracted $6.7 billion in inflows while investment-grade corporate bond ETFs attracted $3.2 billion. Ultra short-term fixed income ETFs were the most popular among maturity levels, which makes sense given the steady rise in both short-term and long-term rates since the beginning of the year.
(Related: First S&P 500 Bond ETF Is Launched)