Flows into cash and fixed income ETFs soared in May, according to Betashares, experiencing threefold growth from the previous month.
According to the firm’s monthly ETF report, cash and fixed income ETFs saw inflows of $1.3 billion in May. This compared to just $366 million in April.
Breaking it down, $761 million of this went into Australian bonds, $307 million went into global bonds, and $233 million went into cash.
Half of the top 10 inflows were into bond ETFs, with Vanguard Global Aggregate Bond Index (Hedged) seeing the largest flows at $306 million. The strong flows were double those of the second-largest flows of $152 million which went into Betashares Australian High Interest Cash ETF.
Three Betashares ETFs rounded out the fixed income exposure at Betashares Australian Investment Grade Corporate Bond ETF ($87 million), Betashares Australian Composite Bond ETF ($85.9 million), and Betashares Australian Bond Senior Floating Rate Bond ETF ($84.2 million).
The flows vastly outpaced those into international and Australian equity ETFs which both experienced inflows of less than $1 billion during the month. International equities gained $929 million and Australian equities gained $752 million compared to $2 billion and $1.6 billion respectively in April.
Ethical international equity ETFs were particularly badly affected by outflows, losing $217 million across the Betashares Global Sustainability Leaders and Betashares Global Sustainability Leaders (Currency Hedged) ETFs.
Overall net inflows for the month across the industry were $3.8 billion which pushed total funds under management to $273.7 billion.
Speaking to Money Management last month, JPMAM’s global head of ETFs, Travis Spence, said he could foresee a boom in fixed income ETFs, especially those in the active space.
“One of the areas we are seeing particular interest from institutional investors is in fixed income which is traditionally an active asset class that can be difficult to access. They don’t always trade on a daily basis, so ETFs offered via the secondary market offer an extra layer of liquidity and that’s an additional benefit. That will be an area of growth going forward.”
Earlier this year, Betashares launched a range of three corporate bond ETFs to offer investors a defined income with diversification and transparency. The Betashares Defined Income Bond ETF range consists of three fixed income ETFs offering attractive income and a defined maturity date and investing in a portfolio of investment-grade corporate bonds that mature in either 2028, 2029, and 2030.
