Investors Pour $12.8 Billion Into Ultra-Short Bond Funds as Equity Downturn Fears Rise
Updated
Updated · CNBC · Aug 15
Investors Pour $12.8 Billion Into Ultra-Short Bond Funds as Equity Downturn Fears Rise
2 articles · Updated · CNBC · Aug 15
Summary
Ultra-short bond ETFs drew $12.8 billion in July as investors trimmed stock exposure and looked for a safer place to park cash.
Longer-dated bonds have offered little shelter: iShares' 20+ Year Treasury Bond ETF has lost an average 6.7% annually over five years, while bank deposits still yield well under 1%.
Advisers say clients are rebalancing after years of equity gains, with Brookwood lifting cash in model portfolios to 5% from 2% in June and favoring baskets of ultra-short ETFs.
Ultra-short funds typically hold debt maturing in under a year and can yield 75 to 110 basis points more than money market ETFs, though they still carry some rate risk.
Money market ETFs are also gaining traction, pulling in $18.7 billion from January through July, but advisers warn against going fully to cash because that turns portfolio management into market timing.