Great Graphic: Exchange Traded Fixed Income Products

It is widely appreciated that Americans, who typically prefer equities over bonds, have re-discovered the fixed income markets on the downside of the credit cycle.  This Great Graphic, from Dodd Kittsley at the  Ishares blog.  It looks at the demand for fixed income through exchange trade products (ETP).

Demand for fixed income ETPs has nearly doubled since 2009.   In the past three years, investors in this space have done what investors more broadly have done and that is to look for better returns than available in the US government bond market, including inflation-linked instruments, like TIPS).  They have shown a preference for corporate bonds, including high yield ("junk") and emerging market bonds.   Of course, the higher returns come at the price of higher risk.  

The demand for emerging market ETPs is especially pronounced.  In the past two years, the share of ETP fixed income inflows accounted for by the emerging markets more than doubled to 5%.  They have experienced inflows nearly every month for the past two years.  Ishares calculates that already in 2012, more than $6 bln of new money has flowed into the EM ETP space.  

Ishares counts some 57 EM exchange traded products that are available, including the eleven that were launched this year.  It also notes that the issuers are creating new space in niches such as EM corporate bonds and EM high yield.  

Great Graphic: Exchange Traded Fixed Income Products Great Graphic:  Exchange Traded Fixed Income Products Reviewed by Marc Chandler on October 31, 2012 Rating: 5
Powered by Blogger.