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A month of strong inflows sees fixed income ETFs draw in USD9.3bn in July

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Invesco research shows July was another strong month for fixed income ETFs with net inflows of USD9.3 billion.

Other findings show:

·       AT1s were the star fixed income performer in July as there was a positive environment for riskier assets

·       Fixed income ETFs have now attracted USD45.3 billion of net new assets (NNA) in 2023

Paul Syms, Head of EMEA ETF Fixed Income and Commodity Product Management at Invesco, comments: “July saw mixed fortunes for bond markets. The minutes of the June Federal Reserve meeting, which showed that some members had favoured a hike rather than the pause, along with strong ADP US employment data, set the tone for bond markets early in the month. Government bond yields sold off with the benchmark 10-year US Treasury rising above 4 per cent for the first time since March. But markets’ direction soon changed, particularly following the release of US inflation data, which was lower than expected, before selling off once more into month-end following stronger-than-expected US GDP data.

“However, while economic data caused returns on government bonds to be close to flat for the month, credit markets performed well with lower-rated bonds leading as equities performed well in a generally positive environment for riskier assets, with AT1s being the star fixed income performer in July.”

Strong inflows were seen across the board

“Fixed income ETFs had a very strong month with net inflows of USD9.3 billion, taking year-to-date NNA to USD45.3 billion. However, unlike in recent months, it is difficult to pick a theme with several categories seeing strong inflows. US Treasuries and Gilts were the strongest categories taking in USD2.2 billion and USD1.5 billion respectively. Cash Management ETFs came in third place with USD1.0 billion NNA, followed by EM Government bonds (USD0.9 billion), USD Investment Grade Credit (USD0.9 billion), and High Yield (USD0.7 billion). EUR Investment Grade Credit (USD0.5 billion) completes the categories that saw inflows over USD0.5 billion. Outflows were light with only Smart Beta (-USD0.3 billion) seeing material selling over the month.”

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