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3 Bond ETFs Seeing Strong Inflows

January 29th, 2014

market bonds2013 can easily be labeled as a year which brought out clear winners and losers in the investment world. While equities clearly won the show, bonds and commodities were struggling in the red.

As concerns over Fed scaling down the asset purchase program loomed large after May last year, yields moved northwards, while bond prices struggled southwards.

Among the concerns about rising rates, longer terms bonds were the worst hit last year, while high yield bonds managed to deliver decent returns.


PowerShares Senior Loan ETF (NYSEARCA:BKLN), Vanguard Short-Term Bond ETF (NYSEARCA:BSV) and iShares Floating Rate Note ETF (NYSEARCA:FLOT) were the three most popular ETFs to attract investor interest in terms of asset under management.

While BKLN has continued with its bull run, we have highlighted two other ETFs besides BKLN, which are seeing heavy inflows this year.

As the Fed unfolds its taper program, these funds could be interesting picks for this year Investors should thus keep a sharp eye on the funds mentioned below.

PowerShares Senior Loan ETF 

Like 2013, this fund has turned out to be the most popular bond ETF in 2014 in terms of asset under management (AUM). BKLN has attracted a whopping $266.36 million since the start of the year. This makes BKLN’s total AUM worth $6.7 billion.

This fund tracks the returns of the S&P/LSTA U.S. Leveraged Loan 100 Index, delivering returns of the senior loan market. (Read: Senior Loan ETFs: The Best Bet for Rising Rates?).

Senior loans, also known as leveraged loans, are private debt instruments issued by a bank and syndicated by a group of banks or institutional investors. These instruments usually have below-investment grade credit ratings and as such pay a high yield.

These floating rate instruments have become quite popular among investors as they greatly reduce risks. This makes these securities an ideal choice in a rising rate environment, while still paying out a solid level of income to investors.

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NYSE:BKLN, NYSE:BSV, NYSE:FLOT


 

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