Corporate bonds drive fixed income ETF flows

IndicesFlows into ETFs that track bond indices were driven mainly by investment grade corporates in the third quarter, BlackRock data shows.

There were $9.4 billion (€8 billion) of inflows into the investment grade corporates category globally, the asset manager reported.

These inflows were followed by flows that track US treasury benchmarks, which saw $7 billion of net new money, and then multi-sector fixed income ETFs, which saw $5.8 billion of sales.

Assets in bond ETFs had reached $750 billion globally at the end of October, BlackRock said.

The firm also said emerging market debt ETFs had been a “strong driver” of bond ETF flows this year with $16 billion of inflows in the year to the end of September.

Local and hard currency exposures gathered inflows in roughly even proportions in Q3. European-based investors drove demand for hard currency exposures, while local currency funds attracted US and European investors alike.

BlackRock said this was “a noteworthy shift” from earlier in the year when US investors heavily favoured hard currency exposure.

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