It was an outstanding month for inflows into exchange traded funds (ETFs) in March.
Flows into ETFs almost tripled to $62.1 billion last month—with the bulk of the money heading into safe assets like government debt—as investors sought shelter from the recent banking crisis.
Developed market government bond ETFs soaked up a record $33.2 billion of the money, eclipsing the previous monthly peak of $27.4 billion set in May 2022, according to data from BlackRock.
It was interesting to note how expectations of two interest rate cuts by the Federal Reserve that might come later in 2023 affected the ETF flows. Investors betting on this would gravitate toward longer-term Treasuries versus those (like me) that prefer the safety of shorter-term Treasuries.
The $28.6 billion of net inflows into U.S. Treasury bond ETFs was divided almost equally between those focused on the short end, middle, and long end of the yield curve.
This divergence in views was visible in iShares 7-10 Year Treasury ETF (IEF), which gathered $6.1 billion in March. Meanwhile, at the other end of the maturity scale the SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) pulled in $3.8 billion according to VettaFi data. And the iShares US Treasury Bond ETF (GOVT), with an effective duration of 6.3 years, was just behind at $3.7 billion.
Let’s do a comparison of the two ETFs on the two duration ends of the yield curve – BIL and GOVT – over the past very volatile year. The quick and easy way to do this to ask Magnifi Personal to run the comparison for us. It’s as simple as asking this investing AI to…
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