Demand for bond ETFs seems to be rising.
According to MarketAxess CEO Chris Concannon, there are signs Treasury ETFs are on the cusp of substantial inflows.
“We’re about to see what I’d call [a] bond renaissance,” the electronic-trading platform CEO instructed CNBC’s “ETF Edge” this week. “The Fed is still taking action, so I would expect bond yields overall to remain relatively high and attractive.”
In late March, the Federal Reserve raised rates by a quarter point — its ninth hike since March 2022. Next Wednesday, Wall Street will get the Fed minutes from the final coverage assembly and extra readability on what could come subsequent.
VettaFi vice chairman Tom Lydon sees a comparable sample. Â
“They’re starting to move back not just into Treasurys, but into corporates and high yields with the idea that we may be able to lock in longer duration and longer payment for those higher rates, [and] with the idea that we’re not going to see higher rates a year from now,” he mentioned.
VettaFi’s newest knowledge finds worldwide and U.S. mounted revenue exchange-traded funds noticed about $45 billion in inflows because the starting of the yr. Meanwhile, it discovered company bond ETFs noticed $6 billion in outflows within the first quarter
Lydon speculates the renewed curiosity is brought on by traders dropping religion in conventional 60/40 funding portfolios.
“We’ve seen a lot of advisors take a little bit off the table, both in the equity side and the fixed income side,” he mentioned. “So, safety is key until we start to see confidence that the Fed really has some handle on inflation and [there’s] stability in the marketplace.”