Fixed income ETFs enjoyed net inflows worth $9.3 billion in July, attracting $45.3 billion of net new assets for the asset class this year, showed Invesco data.
Additional tier 1 bonds (AT1s) were the “star performer” as July created a positive environment for riskier assets. According to the asset manager’s outlook, this asset class will likely drive risk appetite in the days ahead.
US treasuries and gilts were the “strongest categories”, taking in $2.2 billion and $1.5 billion, respectively, followed by cash management with $1.0 billion net new assets, emerging market government bonds and USD investment grade credit ($0.9 billion each), and high yield ($0.7 billion).
EUR investment-grade credit saw inflows of over $0.5 billion.
In credit markets, lower-rated bonds led as equities performed well in a generally positive environment for riskier assets. Outflows were “light”, with only Smart Beta losing $0.3 billion over the month.
Commenting on the “mixed fortunes” for bond markets, Paul Syms, head of EMEA ETF fixed income and commodity product management at Invesco, said: “Government bond yields sold off with the benchmark 10-year US Treasury rising above 4% for the first time since March. But markets’ direction soon changed, particularly following the release of US inflation data, which was lower than expected, before selling off once more into month-end following stronger-than-expected US GDP data.”
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