It’s no doubt that the volatility-laden fourth quarter of 2018 spurred an investor move to bonds, but that trend persisted in the first quarter of 2019 with $34.5 billion going into fixed income exchange-traded funds (ETFs), according to a US-Listed Flash Flows Report from State Street Global Advisors.
It provided more evidence that investors are picking themselves up in 2019 after a tumultuous way to end 2018. The Dow Jones Industrial Average fell 5.6 percent, while the S&P 500 was down 6.2 percent and the Nasdaq Composite declined 4 percent.
2018 marked the worst year for stocks since 2008 and only the second year the Dow and S&P 500 fell in the past decade. In 2019, investors are no doubt reassessing their strategies for how to distribute their capital through the rest of the year.
That said, more investors began to add fixed income products to their portfolios.
“While equity funds took in the most flows last month, bond funds are now breaking records and making headlines,” wrote Matt Bartolini, Head of SPDR Americas Research at State Street Global Advisors. “Fixed income ETFs have taken in $34.5 billion to start the year, the highest flow total ever for a first quarter, narrowly beating out the hot start to 2016.
“The $34.5 billion represents an increase of 5.2% of fixed income ETFs start-of-year assets. If bond funds are able to maintain this pace, it would lead to over $130 billion of fund flows–a figure that would represent new all-time record and likely push total assets over $800 billion for the first time.”
As opposed to simply adding a broad-based fund like the iShares Core US Aggregate Bond ETF (NYSEArca: AGG), it will take more of a strategic bent, such as looking into actively-managed funds or other corners of the bond