However, this trend seems to be reversing as the Fed refrained from withdrawing the stimulus, keeping the current bond buying program intact. This surprise move by the Fed breathed life into the depressed bond market, sending yields lower. Yields on 10-year Treasury notes are now hovering around 2.6%, down from 3% reached in early September (read: 3 ETF Winners from the ‘No Taper’ Shocker).
As such, bond ETFs experienced the biggest inflows in five months, according to the data from Bank of America Merrill Lynch. Total bond funds accumulated net $4.5 billion in the week (ending September 25) immediately following the ‘no taper’ announcement. High yield bonds led the pack, followed by emerging market bonds.
Bond inflows have begun raising bond prices as many investors are now buying bonds in order to take advantage from the falling yield. Further, the looming concerns on the government shutdown and the debt ceiling are compelling investors to enter the bond market.
Below, we have highlighted the three bond ETFs with highest inflows in the past few trading session following the Fed ‘zero taper’:
iShares iBoxx $ High Yield Corporate Bond ETF (NYSEARCA:HYG)
This is the largest and one of the most widely-traded funds in the high yield bond space with AUM of over $15.2 billion and average daily volume of just under five million shares. The product has accumulated about $495 million in assets in the past few trading sessions while charging 50 bps in fees per year from investors.
The fund tracks the iBoxx $ Liquid High Yield Index and holds 854 securities in the basket. About 95% of the product’s holdings mature in less than 10 years, giving HYG an effective duration of 4.24 years and average maturity of 4.83 years. In terms of credit quality, the fund focuses on higher quality non-investment grade bonds, allocating just 35% of the portfolio to bonds rated ‘B’ or lower.
The ETF is up over 2% in the year-to-date time frame and has a 30-day SEC yield of 5.33% (see: all the High Yield Bond ETFs here).
iShares 20+ Year Treasury Bond ETF (NYSEARCA:TLT)
This product provides exposure to the long-term Treasury bond market by tracking the Barclays Capital U.S. 20+ Year Treasury Bond Index and holds 20 securities.(...)Click here to continue reading the original ETFDailyNews.com article: 3 Bond ETFs Seeing Big InflowsYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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