Bond ETFs Reign Supreme as Equity Funds Hemorrhage Assets

Bond ETFs Reign Supreme as Equity Funds Hemorrhage Assets

U.S. fixed income funds lured in nearly $44 billion in the first quarter.

ShubhamSaharan_white_bg
|
Reviewed by: Shubham Saharan
,
Edited by: Shubham Saharan

Investors have largely shunned equity exchange-traded funds in lieu of their fixed income counterparts as several bank runs raise concerns of economic fragility.  

U.S. fixed income funds lured in nearly $44 billion in the first quarter of the year, according to etf.com data. That’s nearly triple the $15 billion the asset class pulled in during the same period last year. Meanwhile, U.S. equity funds bled $2.9 billion in the first three months of the year, a reversal from the $99 billion haul they posted in the year-ago quarter.  

Whipsawing markets, bank runs and back-to-back-to-back Federal Reserve interest rate hikes have resulted in investors rebalancing portfolios and shying away from risk. That’s taking its toll on equity flows, according to analysts.  

That rebalancing is favoring Treasury bill ETFs, especially those with shorter duration exposures, etf.com data shows. Four of the 10 top asset gatherers so far this year have been government exposure funds.  The iShares 7-10 Year Treasury Bond ETF (IEF), the iShares 20+ Year Treasury Bond ETF (TLT), the iShares 0-3 Month Treasury Bond ETF (SGOV) and the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) collectively brought in nearly $19 billion through the end of March, according to etf.com data.  

Meanwhile, equity funds have largely hemorrhaged assets despite an uptick in the stock market. Year to date, the SPDR S&P 500 ETF Trust (SPY) has risen 7.5% year to date, while the tech-heavy Invesco QQQ Trust (QQQ) has jumped 20.1%.  

Still, SPY has been the biggest loser of the year so far, as $8.9 billion has escaped the fund, etf.com data shows.  

  

For a full list of last quarter’s top inflows and outflows, see the table below:  

 

Asset Classes (Year-to-Date)

 Net Flows ($, mm)AUM ($, mm)% of AUM
U.S. Equity-2,855.373,967,836.34-0.07%
International Equity28,785.371,230,424.802.34%
U.S. Fixed Income43,756.481,216,982.193.60%
International Fixed Income5,400.18145,695.023.71%
Commodities-295.30135,803.07-0.22%
Currency-517.253,597.38-14.38%
Leveraged1,955.0655,373.983.53%
Inverse2,859.0621,784.0013.12%
Asset Allocation-2,045.2815,865.59-12.89%
Alternatives-161.067,189.14-2.24%
Total:76,881.906,800,551.511.13%

 

Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

Shubham Saharan is a markets reporter at etf.com. Before joining the company, she reported for Bloomberg and the Financial Times. Saharan is a graduate of Barnard College of Columbia University.