Corporate Bond ETFs Attract Steady Inflows Amid Bond Market Sell-Off

by: AdvisorShares

Minyi Chen, CFA, Chief Operating Officer of TrimTabs Investment Research and Portfolio Manager of AdvisorShares TrimTabs Float Shrink ETF (NYSEARCA:TTFS) shares recent fund flow trends.

Corporate bonds remained popular with investors amid the bond sell-off in recent months, while Foreign and Municipal bond funds experienced the steadiest and heaviest redemptions.

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Despite yields near record lows, corporate bond ETFs have been extremely popular, issuing $3.7 billion (4.9% of assets) in the past month and $9.0 billion (12.0% of assets) in the past three months. Corporate bond MF flows have been pretty flat recently.

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By contrast, Foreign bond funds and Municipal bond funds experienced the heaviest redemptions. Foreign bond ETFs $833 million (5.1% of assets) in the past three months, while Municipal bond ETFs redeemed $870 million (8.1% of assets). Note that municipal bond MFs and ETFs have both been posting steady outflows since early June, well before Detroit's bankruptcy filling.

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The Treasury bond MFs we track daily redeemed $4.7 billion (2.6% of assets) in the past month, continuing a trend of redemptions that began in late May. Treasury bond ETF flows have been far more erratic, but they too have been posting outflows in recent months. They redeemed $2.0 billion (1.8% of assets) in the past three months.

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New Offerings Much Lower Than We Had Expected This Week. Dealogic Reports $1.1 Billion Scheduled for Wednesday and $1.8 Billion Scheduled for Thursday.

The pullback in stock prices in the wake of the Federal Open Market Committee meeting seems to be putting a damper on equity issuance, which is good news for the bulls. In addition to the $1.8 billion priced Friday through Tuesday, Dealogic reports that $1.1 billion is scheduled for Wednesday-led by a $250 million follow-on for AltisourceResidential-and $1.8 billion is scheduled for Thursday-led by an $800 million IPO for Premier and a $350 million IPO for Pattern Energy Group. Unless some big overnight deals materialize, this week's volume may not be much higher than $6 billion, which would be the lowest level in three weeks.
With four trading days of data left, this month's volume already stands at $22.0 billion, so this month's volume is likely to be the highest since May. Nevertheless, a pace of $1.4 billion daily is nothing unusual by historical standards.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: AdvisorShares is an SEC registered RIA, which advises to actively managed exchange traded funds (Active ETFs). This article was written by Minyi Chen, CFA the portfolio manager of the AdvisorShares TrimTabs Float Shrink ETF (TTFS). We did not receive compensation for this article, and we have no business relationship with any company whose stock is mentioned in this article. This information should not be taken as a solicitation to buy or sell any securities, including AdvisorShares Active ETFs, this information is provided for educational purposes only.

Additional disclosure: To the extent that this content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security. AdvisorShares is a sponsor of actively managed exchange-traded funds (ETFs) and holds positions in all of its ETFs. This document should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any products mentioned. Investment in securities carries a high degree of risk which may result in investors losing all of their invested capital. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. To learn more about the risks with actively managed ETFs visit our website communication is a publication of TrimTabs Asset Management. It should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Information presented does not involve the rendering of personalized investment advice. Content should not be construed as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein. Performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing performance returns. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Past performance may not be indicative of future results. Therefore, no investor should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of an investor’s portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio.