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BlackRock iShares Fixed Income Strategy’s Matt Tucker on the rising popularity of fixed income ETFs for investors.
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Inflows into fixed in come exchange traded funds in January -- in -- 144%.
To an all time record in January -- investors.
Four and 34 point one billion dollars into a.
Okay so that is some message that late last year people started to get bullish joining us now on what's driving that surge in demand and whether you should be an -- is Matt Tucker.
Head of -- fixed in -- investing strategy at BlackRock and co creator buy shares first.
Fixed income ETFs or exchange traded funds which in essence are baskets of different opportunities that people can get -- spread -- Risk across their up -- not let's get to it what do you think was the trigger for people pouring money into fixed income ETFs.
I think the last couple once you've seen a general interest in riskier assets and also -- higher yielding assets.
-- a general trend of investors looking at dividend paying stocks looking at investment grade corporate bonds.
High yield bonds like HYG I share looking for ways -- -- yield of their portfolio.
Now a lot of these ETFs originally started out for individual investors dummies like me was just -- you're looking for a way to spread our bets but now the institutional guys are going in war and war why is that.
What its ability ETF is -- basically allows investors in fixed income to access a diversified portfolio fixed income securities on the exchange.
Obviously for -- individual this is a huge benefit initially and they were the first to really get attracted to the instruments.
But if liquidity has grown you know how fines that are supporting so much liquidity there even useful for the largest institutions -- -- he's quick example I'll go ahead.
Excellence at HYGD high yield I share trades about 250 million dollars a day and -- offer spread of about one basis point.
That's a tremendous amount of liquidity in cost efficiency even if -- big institution.
That's a Great Britain for turn over the past three months and here's what it has done -- for -- just slightly below flat for the year but.
You're talking about US government treasuries we're talking fixed -- -- you're talking about a lot of corporate bonds which have some some nice relatively guaranteed returns.
What would you recommend right now people look at at this point 90 everybody's at risk tolerance is different but.
What kind of where the attraction is at the moment.
I think the big trends we're seeing right now -- -- general reach for yield as I talked about mean obviously as you mentioned treasuries just aren't paying very much.
The ten -- -- just below 2% again.
So investors are looking at that and -- how to actually generate enough of dollars of income to be my income needs.
So looking at investment grade credit out and -- CD -- our investment grade corporate bond I share.
It was just below 4%.
At -- high yield as we talked about which is still paying -- five and a half percent above the -- treasuries.
Good to see a -- have a great weekend Matt Tucker head of iShares fixed income investing strategy at BlackRock until have been.
