European investors contemplate Corporate Bond ETFs

Earlier this year, the Fed and other Central Banks took significant measures to fight inflation, with tighter monetary policies and interest rate hikes as their weapons of choice. Fixed income assets responded accordingly with shy performance and depressed prices. Still, it now looks as if market participants are adjusting to the situation, pricing in the anticipated additional rate hikes. Bonds prices have reached record low levels making it hard for bargain-hunting investors to ignore and steering them towards these corporate debt securities. Even more so since U.S. corporate bonds posted their first positive monthly return this year in May, as reported by Reuters.  

Fixed Income ETFs domiciled in Europe registered USD$315 million[1] in net inflows for the week between May 30th and June 2nd. Investors ditched Government Bond ETFs, which experienced USD$286.32 net outflows for Corporate Bond ETFs that added USD$582.57 million of assets. European investors almost equally split their capital between Investment Grade Bond ETFs and High Yield Bond ETFs. The former netted USD$245.07 million of inflows while the latter recorded USD$200.28 million of net inflows. 

Top 5 Government and Corporate Bond ETF flow receivers last week:

1. Xtrackers II Eurozone Government Bond 5-7 UCITS ETF (X57E): USD$239.145 million
2. iShares Core € Corp Bond UCITS ETF (IEAC): USD$192.51 million
3. Invesco AT1 Capital Bond UCITS ETF (AT1): USD$156.98
4. iShares € High Yield Corp Bond UCITS ETF (IHYG): USD$116.82 million
5. UBS ETF – Bloomberg MSCI Euro Area Liquid Corporates Sustainable UCITS ETF (CBSEUA): USD$102.60 million

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[1] Fund flow Data as of June 2nd.