Corporate and Government Debt in High Demand

Corporate and Government Bond ETFs Witness Weekly Inflows

Fixed income ETFs domiciled in Europe recorded USD$1.3 billion in net inflows for the week between July 25th and July 29th. Both government bonds and corporate debt were in high demand in the exchange traded funds market amid equity market swings. While assets flowed across the full range of fixed income securities, corporate bond ETFs took the lion’s share, in a similar fashion to the previous week, with USD$983 million in inflows. Government bond ETFs meanwhile pulled in USD$276 million compared to the previous week’s inflows of USD$746 million.

The Xtrackers II ESG EUR Corporate Bond UCITS ETF (XB4F) led the flow receivers having attracted USD$710 million over the week. This surge of cash follows a 2.05% rebound in XB4F month-to-date amid growing sentiment that the European Central Bank will dial back the pace of rate hikes. The government bond ETF, UBS ETF – Bloomberg EUR Treasury 1-10 UCITS ETF (SS1EUA), came in second having netted USD$393 million in inflows. Indeed, government bonds and related exchange traded funds strengthened as lingering recession concerns prompted an easing of the expected aggressive rate hikes by central banks.  The U.S. Federal Reserve, specifically, was instrumental in helping government bond ETFs gain momentum among both retail and institutional investors.  

Against this backdrop, investment grade bond ETFs saw the highest weekly inflows with USD$1.4 billion whereas high yield bond ETFs shed USD$30 million of assets over the course of the week.  

Top 5 Flow Receivers Last Week:

• Xtrackers II ESG EUR Corporate Bond UCITS ETF (XB4F): USD$710 million
• UBS ETF – Bloomberg EUR Treasury 1-10 UCITS ETF (SS1EUA): USD$393 million
• iShares € Corp Bond ESG UCITS ETF (SUOE): USD$312 million
• iShares € High Yield Corp Bond ESG UCITS ET (EHYA): USD$265 million
• Xtrackers II Eurozone Government Bond UCITS ETF (XGLE): USD$248 million

Fund flow data as of July 29th