Into ultra-short-term bonds amid rate concerns 222billion dollars flowed in
In response to the possibility of U.S. interest rate hikes and uncertainty stemming from the war in the Middle East, investors moved substantial funds into ultra-short-term bond funds with maturities of 1years or less. BlackRock’s 0~3-month Treasury ETF attracted 222billion dollars, while its Treasury ETF with maturities of 20years or more saw net outflows of 32billion dollars.
With the possibility of U.S. interest rate hikes raised again and market uncertainty growing because of the war in the Middle East, investors are moving into ultra-short-term bonds. ‘Ultra-short-term bond funds,’ which invest in maturities of 1years or less, have attracted the most funds among Morningstar’s bond ETFs so far this year. Last 3month, they recorded their largest-ever monthly inflow.
Ultra-short-term bond funds currently offer yields of around 4%. Their relatively low price volatility has recently drawn investor interest. This combination has appealed to investors since the Federal Reserve began raising interest rates in 2022.
Although they have some similarities to money market funds, ultra-short-term bond funds invest in a wider variety of bonds. As a result, their yields are higher and their stability is somewhat lower than that of money market funds. These structural differences are influencing product choices.
By contrast, long-term bonds have continued to perform poorly this year. The longer a bond's maturity, the more sensitive it is to changes in interest rates. Recently, concerns about rising energy prices and inflation resulting from the Iran war have severely dampened investor sentiment toward long-term bonds.
Some market participants2022year bond funds have also raised concerns about a recurrence of large-scale losses. According to FactSet, BlackRock's20year-or-longer-maturity Treasury ETFs have seen net outflows of32hundred million dollars this year. By contrast, BlackRock's0~3month-maturity Treasury ETF has received222hundred million dollars in inflows.
This was the largest inflow among all bond ETFs this year. More money moved into short-term Treasury ETFs than into large funds such as Vanguard's Total Bond Market ETF. Fund flows remain tilted toward short-term products.
Sources: 뉴시스 경제
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