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Fixed Income ETFs That Gained Investor Love Last Week

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Last week, ETFs pulled in about $8 billion in capital, pushing year-to-date inflows to $318.8 billion. U.S. fixed-income ETF led the way higher with $6.9 billion inflows, closely followed by $872 million in U.S. equity and $768 million in international equity, per etf.com.

As such, iShares U.S. Treasury Bond ETF (GOVT - Free Report) , Invesco QQQ Trust (QQQ - Free Report) , iShares 10-20 Year Treasury Bond ETF (TLH - Free Report) , Vanguard Intermediate-Term Corporate Bond ETF (VCIT - Free Report) and iShares 20+ Year Treasury Bond ETF (TLT - Free Report) dominated the top creation list last week.

U.S. stocks ended last week with modest losses. The latest data on solid retail sales, rise in consumer sentiment and easing inflation expectations rekindled investor interest in riskier assets at the end of the last week, thereby erasing most of the loss incurred last week. Easing fears of a larger-than-expected interest rate hike by the Federal Reserve added to the strength.

After falling to its lowest points in more than a decade, the University of Michigan’s Consumer Sentiment index edged up 51.1 in July from 50.0 in June. Retail sales rebounded strongly by 1% in June, indicating that Americans spent more last month amid soaring inflation, which could allay fears of an imminent recession (read: Yield Curve Inverts Most Since 2000: Defensive ETFs in Focus).

Further, consumer long-term inflation expectations declined in early July amid a sharp drop in gasoline prices. The University of Michigan's preliminary survey showed that consumers see inflation running at 2.8% over a five-year horizon, the lowest in a year and down from 3.1% in June.

Meanwhile, the Treasury yield curve remained inverted last week, meaning that long-term rates are going down while short-term rates are moving up. As yields and bond prices are inversely related, a decline in long-term bond yields raised the appeal for the long-duration bonds.

We have detailed the ETFs below:

iShares U.S. Treasury Bond ETF (GOVT - Free Report)

iShares U.S. Treasury Bond ETF topped asset flow creation last week, gathering $2.4 billion in capital. It offers exposure to the broad U.S. Treasury market with treasuries ranging from 1-30 year maturities by tracking the ICE US Treasury Core Bond Index. With AUM of $20.3 billion, iShares U.S. Treasury Bond ETF holds 116 bonds in its basket with a weighted maturity of 7.85 years and an effective duration of 6.31 years.

iShares U.S. Treasury Bond ETF charges investors 15 bps in fees per year and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook (read: Best Fixed-Income ETFs of 1H22).

Invesco QQQ Trust (QQQ - Free Report)

Invesco QQQ gathered about $2.2 billion in its asset. QQQ provides exposure to the 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Invesco QQQ is heavily concentrated on the top two firms with a double-digit allocation, while other firms hold no more than 6.8% of assets. The product is also heavily tilted toward information technology at 54%, while consumer discretionary and communication services round off the next two spots.

Invesco QQQ is one of the largest and most popular ETFs in the large-cap space, with AUM of $158.7 billion and an average daily volume of 71 million shares. QQQ charges investors 20 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares 10-20 Year Treasury Bond ETF (TLH - Free Report)

iShares 10-20 Year Treasury Bond ETF saw an inflow of $2 billion last week. It offers exposure to longer-term U.S. Treasury bonds and follows the ICE US Treasury 10-20 Year Bond Index. iShares 10-20 Year Treasury Bond ETF holds 14 bonds in its basket, with average maturity and effective duration coming in at 17.96 years and 14.19 years, respectively.

iShares 10-20 Year Treasury Bond ETF has accumulated $4.4 billion in its asset base while trading in lower volumes of 213,000 shares a day, on average. It charges 15 bps in annual fees and has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.

Vanguard Intermediate-Term Corporate Bond ETF (VCIT - Free Report)

Vanguard Intermediate-Term Corporate Bond ETF has accumulated $981 million in its asset base. It follows the Bloomberg U.S. 5–10 Year Corporate Bond Index and holds 2,127 bonds in its basket with an effective maturity of 7.6 years and an average duration of 6.3 years.

With AUM of $41.1 billion, Vanguard Intermediate-Term Corporate Bond ETF trades in a solid volume of around 5.4 million shares and has 0.04% in expense ratio. The product has a Zacks ETF Rank #4 with a Medium risk outlook.

iShares 20+ Year Treasury Bond ETF (TLT - Free Report)

iShares 20+ Year Treasury Bond ETF has pulled in $968 million in capital alst week. It provides exposure to long-term Treasury bonds by tracking the ICE U.S. Treasury 20+ Year Bond Index. iShares 20+ Year Treasury Bond ETF holds 32 securities in its basket and charges 15 bps in annual fees. It has an average maturity of 25.80 years and an effective duration of 8.18 years (read: Did Safe Haven ETFs Protect Your Portfolio from Market Turmoil?).

TLT is one of the most popular and liquid ETFs in the bond space, with AUM of $21.9 billion and an average daily volume of 19.4 million shares. iShares 20+ Year Treasury Bond ETF has a Zacks ETF Rank #5 with a High risk outlook.