Flows go to high yield and corporate bond ETFs

ETF investors ploughed money into riskier assets last week following news of the Eurozone deal and despite recent developments, interest in high yield and corporate bond ETFs remains.

Cowen reports that there was a bullish trend last week, with inflows into equity ETFs outstripping bond ETFs for the first time since September.

It helped OTC buyers in iShares Eurostoxx 50 and iShares Dax ETFs; the Dax ETF topped the orders at $260mm. Meanwhile Lyxor reported outflows in its CAC ETF range totalling €133mn.

There was also strong demand in the corporate bond and high yield ETF market as UK investors went into ETFs such as iShares Markit iBoxx £ Corporate Bond ETF and iShares Markit iBoxx Euro High Yield Bond ETF.

Volumes remained low across Europe and the US, however and Cowen reports they are likely to remain that way for a few weeks.

As a result, last week Cowen was able to source liquidity in the market making community, rather than turning to the primary market for ETF shares.

Following the news this week that the Greek prime minister will call a referendum on the Eurozone deal, moderate inflows into corporate bond ETF have continued.

The iShares Markit iBoxx Euro High Yield Bond ETF has had daily creations and the top ETFs for inflows so far this week have all been iShares' fixed income ETFs.

Outflows last week came from government bond ETFs, with Lyxor reporting outflows of €77mn. Emerging markets saw inflows.