ETF Investing: Bond ETFs saw their highest inflows in three years in April

Mutual Funds


Investors snapped up fixed-income exchange-traded funds in April, with the category seeing its biggest month of inflows in more than three years.

According to data from BlackRock, U.S.-listed fixed-income ETFs have seen inflows of $14.7 billion in April. This is poised to be the biggest month of inflows since October 2014. To compare, equity listed funds saw $8.6 billion in inflows, snapping a two-month streak of outflows.

Currently, there is about $602.3 billion in U.S.-listed bond ETF assets, according to FactSet. That’s dwarfed by the $2.8 trillion held in stock products.

The move into bond funds came at a time when yields mostly rose, with the yield on the 10-year U.S. Treasury note

TMUBMUSD10Y, -0.63%

 hitting a four-year high above 3% in late April before subsequently retreating.

“Investors began allocating to fixed income once rates appeared to stabilize in the high 2% range,” said Steve Laipply, head of U.S. iShares fixed-income strategy at BlackRock, referring to the benchmark U.S. Treasury note.

The rise in bond yields means that bond prices moved lower during the month, as yields and prices move inversely to each other. The broad iShares Core U.S. Aggregate Bond ETF

AGG, +0.02%

 fell 1.1% over the month of April.

Among other categories, the iShares iBoxx $ Investment Grade Corporate Bond ETF

LQD, -0.10%

 fell 1.8% over the month, while the iShares iBoxx $ High Yield Corporate Bond ETF

HYG, -0.07%

 rose 0.2%. To compare, the S&P 500

SPX, -0.82%

 rose 0.7% over April, while the Dow Jones Industrial Average

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 rose 0.6% and the Nasdaq Composite Index

COMP, -0.75%

 rose 0.3%.

“Persistent equity market volatility has driven flows to broad fixed income” products, Laipply wrote in emailed comments. The iShares Core U.S. Aggregate Bond ETF had inflows of $1.7 billion.

Among the most popular bond ETFs over the past month, $3.5 billion has flowed into the iShares Short Treasury Bond ETF

SHV, +0.00%

while $1.7 billion moved into the iShares 20+ Year Treasury Bond ETF

TLT, +0.19%

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