Hello! For this week\u2019s ETF Wrap, I spoke with BlackRock\u2019s Steve Laipply on investor demand for exchange-traded funds that buy bonds.<\/p>\n
Please send feedback and tips to christine.idzelis@marketwatch.com or isabel.wang@marketwatch.com. You can also follow me on Twitter at\u00a0@cidzelis<\/a>\u00a0and find me on\u00a0LinkedIn. Isabel Wang is on Twitter at\u00a0@Isabelxwang<\/a>.<\/p>\n Sign up\u00a0<\/strong>here<\/strong>\u00a0for our weekly ETF Wrap.<\/strong><\/p>\n Investors\u2019 appetite for exchange-traded funds that buy bonds has pushed assets to a level that BlackRock sees tripling by 2030. \u00a0<\/p>\n Bond ETF assets under management have just crossed the $2 trillion mark globally, according to a spokesperson for BlackRock. \u201cWe think assets will actually triple by the end of the decade\u201d to $6 trillion, revised up from an earlier estimate of $5 trillion, said Steve Laipply, global co-head of bond ETFs at BlackRock, by phone. <\/p>\n Bonds have been popular this year.<\/p>\n \u201cFund investors have spent all of 2023 selling a rising stock market and buying bonds,\u201d wrote Nicholas Colas, co-founder of DataTrek Research in a note emailed Thursday, citing flows for mutual funds and ETFs. \u201cThe last 2 weeks have seen something of a shift in fund investor sentiment, with this cohort adding U.S. equity exposure in each period after a long run (all of 2023) of persistently selling this asset class.\u201d<\/p>\n The S&P 500 U.S.-listed bond ETFs have seen more than $100 billion of inflows this year, with BlackRock\u2019s iShares business representing just under half of that, according to Laipply. Fixed-income investors are attracted to high interest rates not seen in more than a decade after \u201cthe great yield reset\u201d last year as inflation surged, he said.<\/p>\n \u201cThe top flowing ticker this year for us\u201d is the iShares 20+ Year Treasury Bond ETF \u201cIt does appear that investors are cognizant of the possibility of a slowdown\u201d in the U.S. economy, he said. But \u201cit may not necessarily mean a hard landing,\u201d said Laipply. \u201cThe debate is wide open there.\u201d<\/p>\n Bond ETF flows at BlackRock this year show investors allocating across durations, but not piling broadly into short-duration Treasurys, he said, pointing to $1.1 billion in outflows this year for the iShares 1-3 Year Treasury Bond ETF \u201cLonger-dated bonds traditionally have served as a good hedge\u201d in a risk-off environment, said Laipply, though 2022 was brutal for both stocks and bonds.\u00a0<\/p>\n While both asset classes were broadly pummeled last year as the Federal Reserve battled the highest inflation in decades with higher rates, the ultra-short end of the Treasury market fared relatively well. For example, the iShares 0-3 Month Treasury Bond ETF This year, the fund is up 2.5% through Wednesday on a total return basis, trailing the 2.9% gain for the iShares 20+ Year Treasury Bond ETF but surpassing the 1.7% total return for the iShares U.S. Treasury Bond ETF over the same period.<\/p>\n Investors appear less worried about inflation this year based on industry outflows from ETFs that buy Treasury inflation-protected securities, according to Laipply. That \u201cpaints the picture that investors believe inflation has peaked,\u201d he said.\u00a0<\/p>\n A report Wednesday from the Bureau of Labor Statistics showed inflation in June rose slightly less than expected, based on data from the consumer-price index. Core inflation, which excludes food and energy prices, had the smallest monthly increase since August 2021, according to the report.<\/p>\n The \u201cCPI report was good news, and recent trends show the U.S. economy has escaped a 1970s-style inflationary spiral,\u201d said DataTrek\u2019s Colas in the firm\u2019s note.\u00a0<\/p>\n Read:<\/strong> U.S. stocks rise as bulls get \u2018wish\u2019 on inflation report, yet soft landings for Fed are \u2018pretty improbable\u2019<\/p>\n Treasury ETFs rose after Wednesday\u2019s CPI report, extending their rally Thursday with\u00a0bigger gains for funds focused on U.S. government bonds with longer-dated maturities. For example, shares of the iShares 20+ Year Treasury Bond ETF climbed slightly more than 1% on Thursday, while the iShares 1-3 Year Treasury Bond ETF edged up 0.3%, FactSet data show.<\/p>\n As usual, here\u2019s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.<\/p>\n
\n SPX,
\n
\n closed above the 4,500 mark on Thursday for the first time in 15 months, while also ending only 6% from its record close of 4,796.56 set on Jan. 3, 2022, according to Dow Jones Market Data.<\/p>\n
\n TLT,
\n
\n with about $13 billion of inflows through July 11, he said. Within Treasurys, the iShares 7-10 Year Treasury Bond ETF
\n IEF,
\n
\n and the iShares U.S. Treasury Bond ETF
\n GOVT,
\n
\n which provides exposure to Treasurys with 1-30 year maturities, captured the next biggest inflows over the same period, according to Laipply.<\/p>\n
\n SHY,
\n
\n as of July 11. BlackRock has seen mixed demand for shorter-dated bonds so far in 2023, with the iShares 0-3 Month Treasury Bond ETF attracting inflows, he said.\u00a0<\/p>\n
\n SGOV,
\n
\n posted a total return of 1.6% in 2022, according to FactSet data.\u00a0<\/p>\nThe good\u2026<\/h2>\n
\n
\n \n Top Performers<\/strong><\/p>\n<\/td>\n \n %Performance<\/strong><\/p>\n<\/td>\n<\/tr>\n \n \n VanEck Oil Services ETF
\n OIH,
\n \n 12.4<\/p>\n<\/td>\n<\/tr>\n \n \n ARK Genomic Revolution ETF
\n ARKG,
\n \n 12.4<\/p>\n<\/td>\n<\/tr>\n \n \n ETFMG Prime Junior Silver Miners Fund
\n SILJ,
\n \n 11.4<\/p>\n<\/td>\n<\/tr>\n \n \n VanEck Junior Gold Miners ETF
\n GDXJ,
\n \n 11.0<\/p>\n<\/td>\n<\/tr>\n \n \n KraneShares CSI China Internet ETF
\n KWEB,
\n \n 10.0<\/p>\n<\/td>\n<\/tr>\n \n \n Source: FactSet data through Wednesday, July 12. Start date July 6. Excludes ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater<\/p>\n<\/td>\n \n <\/td>\n<\/tr>\n<\/table>\n \u2026and the bad<\/h2>\n
\n
\n \n Bottom Performers<\/strong><\/p>\n<\/td>\n \n %Performance<\/strong><\/p>\n<\/td>\n<\/tr>\n \n \n Invesco DB US Dollar Index Bullish Fund
\n UUP,
\n \n -2.5<\/p>\n<\/td>\n<\/tr>\n \n \n iMGP DBi Managed Futures Strategy ETF
\n DBMF,
\n \n -2.0<\/p>\n<\/td>\n<\/tr>\n \n \n WisdomTree Japan Hedged Equity Fund
\n DXJ,
\n \n -2.0<\/p>\n<\/td>\n<\/tr>\n \n \n iShares U.S. Healthcare Providers ETF
\n IHF,
\n \n -1.3<\/p>\n<\/td>\n<\/tr>\n \n \n First Trust Nasdaq Food & Beverage ETF
\n FTXG,
\n \n -1.1<\/p>\n<\/td>\n<\/tr>\n \n \n Source: FactSet data <\/p>\n<\/td>\n \n <\/td>\n<\/tr>\n<\/table>\n New ETFs<\/h2>\n
\n
\n GPOW,
\n
\n UPGR,
\n
\n Xtrackers Semiconductor Select Equity ETF
\n CHPS,
\n
\n and Xtrackers Cybersecurity Select Equity ETF
\n PSWD,
\n
\n QIS,
\n
\n a fund that invests \u201cin a diversified portfolio of third-party quantitative investment strategies across equities, interest rates, commodities, and currencies.\u201d<\/p>\n<\/li>\n<\/ul>\nWeekly ETF reads<\/h2>\n<\/p><\/div>\n