Bond ETFs see influx as equity funds sold off

INVESTORS abandoned equity-based exchange traded products (ETPs) last month and ploughed capital into fixed-income products, BlackRock said yesterday, to secure steadier returns and avoid the stock market volatility seen over recent months.

Investors pulled $8.5bn (£5.4bn) out of equity exchange traded funds (ETFs), but added $3.7bn into bond products and $4bn into commodity funds over the month as appetite for steadier-performing products and gold ETFs as a safe haven increased.

“ETPs are attracting huge interest from fixed income investors who are eager to maximise yield and manage their costs,” said BlackRock managing director Kevin Feldman.

Assets under management across all ETPs fell by $600m in November to $1.54 trillion, with most of the decline due to negative market and exchange rate movements rather than outflows.

“The European debt crisis, as well as the failure of US legislators to devise a long-term deficit reduction proposal, has prompted many investors to adopt a ‘wait and see’ approach and to focus on re-allocating assets rather than committing new money,” the report said.

Despite this, assets under management were $61bn or 4.1 per cent up from the start of the year.