The demand for bond ETFs seems to be increasing.
According to Chris Concannon, CEO of MarketAxess, there are signs that Treasury ETFs are poised for substantial inflows.
“We are about to see what I would call [a] bond revival,” the CEO of the electronic trading platform told CNBC’s “ETF Edge” this week. “The Fed continues to act, so I expect bond yields to remain relatively high and attractive overall. .”
At the end of March, the Federal Reserve raised rates by a quarter point – its ninth hike since March 2022. Next Wednesday, Wall Street will receive the Fed’s minutes from the last policy meeting and more clarity on what may come next.
VettaFi VP Tom Lydon sees a similar pattern.
“They’re starting to come back not just into Treasuries but into corporates and high yields with the idea that we might be able to lock in a longer term and a longer payout for those higher rates, [and] with the idea that we’re not going to see higher rates in a year,” he said.
The latest data from VettaFi reveals that international and US fixed income exchange-traded funds have seen inflows of around $45 billion since the start of the year. Meanwhile, it found that corporate bond ETFs saw $6 billion in outflows in the first quarter.
Lydon speculates that the renewed interest is caused by investors’ loss of faith in traditional 60/40 investment portfolios.
“We’ve seen a lot of advisers pull back from the table a bit, both on the equity side and the fixed income side,” he said. “So safety is key until we start to see confidence that the Fed is really getting inflation under control and [there’s] stability in the market. »