Despite a big rally in stocks this year, investors are barreling toward the bond market as inflows look to break a new monthly record.
div > div.group > p:first-child"> Inflows to U.S. high-grade funds and exchange-traded funds have averaged $846 million per day in March, ahead of the $800 million average during the record month last year, according to research from Bank of America Merrill Lynch."Based on daily fund and ETF inflows, March is on track to set a new monthly record," Bank of America credit strategists Yuri Seliger and Yunyi Zhang wrote Wednesday.
The iShares iBoxx Investment Grade Corporate Bond ETF, just one of many such funds, has alone seen inflows of more than $600 million in the past month and about $440 million since the start of March. Some investors may view corporate debt as a somewhat safer bet over a volatile equity market despite sharp gains in the S&P 500 this year. Though the broad, large-cap index is up more than 11 percent this year, fund flows have not kept pace. The SPDR S&P 500 ETF, one of the largest in the world with over $260 billion under management, has seen outflows of more than $10 billion since the year began.
The yield on the benchmark 10-year Treasury note is down more than 25 basis points since last Monday, falling under the rate on the 3-month Treasury bill. On the corporate side, companies in the U.S. have taken advantage of low interest rates both to grow business and reward shareholders, ballooning their own debt sums.
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