Record Outflows Hit Investment Grade ETFs

Investment grade corporate bond exchange traded funds (ETFs) experienced the second-highest monthly outflows on record in September, with $4.1 billion being withdrawn. The selling was concentrated in US-listed vehicles, although Europe-listed counterparts also suffered outflows of $0.6 billion. However, investors poured $35.1 billion into US equity ETFs, more than three times the amount registered in August. This influx of funds was essentially directed into many of the same companies that issued the investment grade credit being sold. Government bond ETFs, on the other hand, attracted $16.9 billion in inflows. The behavior of fixed income ETF investment is becoming more granular, with differing expectations in different markets.