Investors Pour Into Long Bonds Even as They Sell Off
Investors poured over $38 billion into U.S. listed ETFs during the week ending August 14, contributing to a year-to-date inflow of around $1.3 trillion. US equity ETFs received about $20 billion, followed by US fixed income with $7 billion, and international equity ETFs adding $6.5 billion. Among individual funds, the Invesco QQQ Trust (QQQ) attracted the most, with $5.6 billion in inflows, closely followed by the iShares 20+ Year Treasury Bond ETF (TLT) with $5.3 billion.
Long-dated Treasuries experienced a sell-off last week, with the 30-year yield hitting a 19-year high above 5.3%, its highest since 2007. Instead of fleeing, some investors saw the selloff as an opportunity and invested in TLT, despite its price falling. The fund is down 2.4% this year on a total-return basis, including both price and yield.
While investors flowed into TLT, they withdrew from the iShares 7-10 Year Treasury Bond ETF (IEF), which had the largest outflows of $4 billion. The increase in yields has not been consistent across maturities, with the 10-year yield remaining below its 2023 peak, trading around 4.7%. Semiconductors also saw significant outflows, with the iShares Semiconductor ETF (SOXX) and the Direxion Daily Semiconductor Bull 3X Shares (SOXL) among the top redemptions.
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