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The global ETF industry is booming with huge gyrations in the stock market. This is especially true as investors hauled in $62.1 billion into ETFs last month, almost triple the inflows seen in February, per the BlackRock report. This brings first-quarter net inflows to $148.5 billion.
Most of the inflows was driven by fixed-income ETFs, which pulled in about $38 billion, marking the biggest gain since October. The global economic uncertainty caused by the collapse of Silicon Valley Bank and a mixed bag of investor expectations for the direction of monetary policy drove the purchase of safer fixed-income products. The yield on 2-year notes soared past 5% for the first time since 2007 in early March, before staging its biggest three-day decline since 1987. The deep decline in yields bolstered the fixed-incme market.
While inflation has slowed from the 9.1% peak in June last year to around 5%, it is still more than double the 2% target of the Fed. Inflationary pressures also increased the demand for fixed-income products (read: 5 ETFs to Play as Inflation Cools Down to 5%).
Meanwhile, equity ETFs gathered $24.3 billion in capital last month and commodity ETFs saw $1.7 billion in inflows powered by gold. The yellow metal jumped above the 2,000 mark after the sudden collapse of two U.S. regional banks earlier last month.
Worries about financial instability across the globe as well as recession fears raised the appeal for gold ETFs as a safe haven and a store of value. Worries of a recession have intensified with the latest batch of data pointing to a slowdown in the economy. Gold is often used as a means of preserving wealth during times of financial and political uncertainty. It usually does well when other asset classes struggle.
The solid growth trend is likely to continue going forward. According to research by PwC, global ETF assets could top $11 trillion by 2027. Fixed-income ETFs are expected to remain the top contributor, growing substantially faster than any other asset class. The survey projects 69% demand for fixed-income ETFs compared to only 50% for global equity ETFs.
The International Monetary Fund warned that the risk of a recession has grown for advanced economies in the wake of bank failures in the United States and Europe and slashed its outlook for global growth this year. The agency projects the global economy to expand at 2.8% this year, down from the previous January estimate of 2.9%. In particular, about 90% of advanced economies are projected to see growth drop this year (read: Forget Recession Fears, Invest in These Safe ETFs).
If this wasn’t enough, bond trading might be sending a recession warning. The daily fluctuations in two-year Treasury yields erupted last month into the widest in 40 years. The ICE BofA MOVE Index, which tracks expected swings in Treasuries as measured by one-month options, climbed in mid-March to its highest since 2008, opening the biggest gap between stock and bond volatility in 15 years as well. Even after the bank crisis eased, the gauge remains more than double its average over the past decade.
The combination of factors will continue to boost demand for safe-haven products like fixed income and gold. As such, we highlight five ETFs that are expected to gain more investor attraction in the coming months.
iShares 7-10 Year Treasury Bond ETF accumulated $6 billion in capital in March. It targets mid-cap U.S. Treasury bonds and tracks the ICE US Treasury 7-10 Year Index. With AUM of $30.4 billion, iShares 7-10 Year Treasury Bond ETF holds 16 bonds in its basket with weighted maturity of 8.37 years and an effective duration of 7.61 years.
iShares 7-10 Year Treasury Bond ETF charges investors 15 bps in fees per year and trades in an average daily volume of 9.5 million shares. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
SPDR Bloomberg 1-3 Month T-Bill ETF has accumulated $3.8 billion in its asset base last month. It seeks to provide exposure to zero-coupon U.S. Treasury securities that have a remaining maturity of 1-3 months. It follows the Bloomberg 1-3 Month U.S. Treasury Bill Index, holding 18 securities in its basket. Both average maturity and adjusted duration come in at 0.12 years.
SPDR Bloomberg 1-3 Month T-Bill ETF has AUM of $29.4 billion and an average daily volume of 8 million shares. It charges 14 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Most Loved/Hated ETFs Amid the Height of Banking Crisis).
iShares U.S. Treasury Bond ETF has pulled in $3.6 billion in capital. It offers exposure to the broad U.S. Treasury market with treasuries ranging from 1-30 year maturities by tracking the IDC US Treasury Core Index. With AUM of $25.9 billion, iShares U.S. Treasury Bond ETF holds 142 bonds in its basket with a weighted maturity of 7.88 years and an effective duration of 6.24 years.
iShares U.S. Treasury Bond ETF charges investors 5 bps in fees per year and trades in average daily volume of 13 million shares. It has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares 0-3 Month Treasury Bond ETF saw inflows of $2.3 billion in March. It offers exposure to U.S. Treasury bonds with remaining maturities less than or equal to three months. iShares 0-3 Month Treasury Bond ETF follows the ICE 0-3 Month US Treasury Securities Index with an average maturity of 0.10 years and an effective duration of 0.10 years.
iShares 0-3 Month Treasury Bond ETF has AUM of $10.6 billion and trades in an average daily volume of 2.5 million shares. SGOV charges 5 bps in annual fees and has a Zacks ETF Rank #3.
iShares 20+ Year Treasury Bond ETF gathered $2.3 billion in capital. 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 35 securities in its basket and charges 15 bps in annual fees. It has an average maturity of 25.52 years and an effective duration of 17.60 years (read: 5 ETFs That Hauled in the Maximum Asset Flow in Q1).
TLT is one of the most popular and liquid ETFs in the bond space, with AUM of $34.8 billion and an average daily volume of 21 million shares. iShares 20+ Year Treasury Bond ETF has a Zacks ETF Rank #4 (Sell) with a High risk outlook.
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Investors Falling in Love With ETFs More Deeply
The global ETF industry is booming with huge gyrations in the stock market. This is especially true as investors hauled in $62.1 billion into ETFs last month, almost triple the inflows seen in February, per the BlackRock report. This brings first-quarter net inflows to $148.5 billion.
Most of the inflows was driven by fixed-income ETFs, which pulled in about $38 billion, marking the biggest gain since October. The global economic uncertainty caused by the collapse of Silicon Valley Bank and a mixed bag of investor expectations for the direction of monetary policy drove the purchase of safer fixed-income products. The yield on 2-year notes soared past 5% for the first time since 2007 in early March, before staging its biggest three-day decline since 1987. The deep decline in yields bolstered the fixed-incme market.
While inflation has slowed from the 9.1% peak in June last year to around 5%, it is still more than double the 2% target of the Fed. Inflationary pressures also increased the demand for fixed-income products (read: 5 ETFs to Play as Inflation Cools Down to 5%).
Meanwhile, equity ETFs gathered $24.3 billion in capital last month and commodity ETFs saw $1.7 billion in inflows powered by gold. The yellow metal jumped above the 2,000 mark after the sudden collapse of two U.S. regional banks earlier last month.
Worries about financial instability across the globe as well as recession fears raised the appeal for gold ETFs as a safe haven and a store of value. Worries of a recession have intensified with the latest batch of data pointing to a slowdown in the economy. Gold is often used as a means of preserving wealth during times of financial and political uncertainty. It usually does well when other asset classes struggle.
The solid growth trend is likely to continue going forward. According to research by PwC, global ETF assets could top $11 trillion by 2027. Fixed-income ETFs are expected to remain the top contributor, growing substantially faster than any other asset class. The survey projects 69% demand for fixed-income ETFs compared to only 50% for global equity ETFs.
The International Monetary Fund warned that the risk of a recession has grown for advanced economies in the wake of bank failures in the United States and Europe and slashed its outlook for global growth this year. The agency projects the global economy to expand at 2.8% this year, down from the previous January estimate of 2.9%. In particular, about 90% of advanced economies are projected to see growth drop this year (read: Forget Recession Fears, Invest in These Safe ETFs).
If this wasn’t enough, bond trading might be sending a recession warning. The daily fluctuations in two-year Treasury yields erupted last month into the widest in 40 years. The ICE BofA MOVE Index, which tracks expected swings in Treasuries as measured by one-month options, climbed in mid-March to its highest since 2008, opening the biggest gap between stock and bond volatility in 15 years as well. Even after the bank crisis eased, the gauge remains more than double its average over the past decade.
The combination of factors will continue to boost demand for safe-haven products like fixed income and gold. As such, we highlight five ETFs that are expected to gain more investor attraction in the coming months.
iShares 7-10 Year Treasury Bond ETF (IEF - Free Report)
iShares 7-10 Year Treasury Bond ETF accumulated $6 billion in capital in March. It targets mid-cap U.S. Treasury bonds and tracks the ICE US Treasury 7-10 Year Index. With AUM of $30.4 billion, iShares 7-10 Year Treasury Bond ETF holds 16 bonds in its basket with weighted maturity of 8.37 years and an effective duration of 7.61 years.
iShares 7-10 Year Treasury Bond ETF charges investors 15 bps in fees per year and trades in an average daily volume of 9.5 million shares. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL - Free Report)
SPDR Bloomberg 1-3 Month T-Bill ETF has accumulated $3.8 billion in its asset base last month. It seeks to provide exposure to zero-coupon U.S. Treasury securities that have a remaining maturity of 1-3 months. It follows the Bloomberg 1-3 Month U.S. Treasury Bill Index, holding 18 securities in its basket. Both average maturity and adjusted duration come in at 0.12 years.
SPDR Bloomberg 1-3 Month T-Bill ETF has AUM of $29.4 billion and an average daily volume of 8 million shares. It charges 14 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Most Loved/Hated ETFs Amid the Height of Banking Crisis).
iShares U.S. Treasury Bond ETF (GOVT - Free Report)
iShares U.S. Treasury Bond ETF has pulled in $3.6 billion in capital. It offers exposure to the broad U.S. Treasury market with treasuries ranging from 1-30 year maturities by tracking the IDC US Treasury Core Index. With AUM of $25.9 billion, iShares U.S. Treasury Bond ETF holds 142 bonds in its basket with a weighted maturity of 7.88 years and an effective duration of 6.24 years.
iShares U.S. Treasury Bond ETF charges investors 5 bps in fees per year and trades in average daily volume of 13 million shares. It has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares 0-3 Month Treasury Bond ETF (SGOV - Free Report)
iShares 0-3 Month Treasury Bond ETF saw inflows of $2.3 billion in March. It offers exposure to U.S. Treasury bonds with remaining maturities less than or equal to three months. iShares 0-3 Month Treasury Bond ETF follows the ICE 0-3 Month US Treasury Securities Index with an average maturity of 0.10 years and an effective duration of 0.10 years.
iShares 0-3 Month Treasury Bond ETF has AUM of $10.6 billion and trades in an average daily volume of 2.5 million shares. SGOV charges 5 bps in annual fees and has a Zacks ETF Rank #3.
iShares 20+ Year Treasury Bond ETF (TLT - Free Report)
iShares 20+ Year Treasury Bond ETF gathered $2.3 billion in capital. 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 35 securities in its basket and charges 15 bps in annual fees. It has an average maturity of 25.52 years and an effective duration of 17.60 years (read: 5 ETFs That Hauled in the Maximum Asset Flow in Q1).
TLT is one of the most popular and liquid ETFs in the bond space, with AUM of $34.8 billion and an average daily volume of 21 million shares. iShares 20+ Year Treasury Bond ETF has a Zacks ETF Rank #4 (Sell) with a High risk outlook.