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Fixed Income Seeing Strong Flows, Solid Performance

This time a year ago, fixed income funds were seeing some “pretty hefty outflows,” according to Janel Jackson, principal and global head of ETF capital markets and broker & index relations at Vanguard. Now, bond funds are seeing an influx of investor capital, thanks to high yields and strong performance.

“Around this time last year, we were seeing pretty hefty outflows on the fixed income side of the house, Jackson said. “Now, we’re starting to see inflows there as investors have an opportunity to capture these higher yields.”

Appearing on Bloomberg TV, Jackson added that investors are also “getting strong positive performance” in fixed income. In particular, Vanguard is “seeing a lot of cash coming into ex-U.S. debt.”

VettaFi’s vice chair Tom Lydon shared this sentiment in a recent episode of ETF Prime, explaining that more advisors are feeling more confident going longer in duration and going up the yield curve, with “more appetite for high yields.”

Vanguard currently has a suite of 20 fixed income ETFs, including ex-U.S. debt funds like the Vanguard Total International Bond Index Fund ETF Shares (BNDX) and the Vanguard Emerging Markets Government Bond Index Fund ETF Shares (VWOB).

BNDX seeks to track the performance of a benchmark index that measures the investment return of non-U.S. dollar-denominated investment-grade bonds. The fund employs an indexing investment approach designed to track the performance of the Bloomberg Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged), which provides a broad-based measure of the global, investment-grade, fixed-rate debt markets.

VWOB, meanwhile, seeks to track the performance of the Bloomberg USD Emerging Markets Government RIC Capped Index, which measures the investment return of U.S. dollar-denominated bonds issued by governments and government-related issuers in emerging market countries.

For more news, information, and analysis, visit the Fixed Income Channel.

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