Industry Updates

Federal Reserve reveals ETFs it is purchasing in bond-buying programme

Tom Eckett

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The Federal Reserve has revealed which corporate bond ETFs it has purchased as part of its ‘unlimited’ quantitative easing measures.

According to a release last Friday, the Fed has so far poured $1.3bn into 15 ETFs, as of 26 May, since it started its purchases on 12 May in a bid to calm spooked markets following the rapid spread of coronavirus.

BlackRock is the ETF issuer to receive to most flows with 48% of the assets across seven products while Vanguard is second with 35% and State Street Global Advisors (SSGA) is third with 15%. DWS and VanEck make up the remaining 2%.

So far, the $49.7bn iShares iBoxx US Dollar Investment Grade Corporate Bond ETF (LQD) has seen the most inflows with $326m.

Rounding off the top three is the Vanguard Intermediate-Term Corporate Bond ETF (VCIT) and the Vanguard Short-Term Corporate Bond ETF (VCSH) with $228m and $226m inflows, respectively.

BlackRock is executing the purchases on behalf of the US central bank however the US giant has said it will waive any fees it receives from these flows.

ETF Insight: Should the ETF industry be concerned about BlackRock’s role with Federal Reserve?

Corporate bond ETFs have seen big inflows since the Fed announced on 23 March that it would purchase ETFs for the first time in its history.

LQD, for example, witnessed $12.7bn inflows in March and April as traders looked to front-run the Fed’s planned purchases.

(US $)

Fund NameTickerShares PurchasedMarket Value as of May 19, 2020iShares iBoxx US Dollar Investment Grade Corporate Bond ETFLQD2,521,892326,282,386.96Vanguard Intermediate-Term Corporate Bond ETFVCIT2,483,885228,095,159.55Vanguard Short-Term Corporate Bond ETFVCSH2,776,786226,196,987.56iShares iBoxx High Yield Corporate Bond ETFHYG1,255,084100,657,736.80SPDR Bloomberg Barclays High Yield Bond ETFJNK905,28489,532,587.60iShares Short-Term Corporate Bond ETFIGSB1,639,30188,341,930.89SPDR Portfolio Intermediate Term Corporate Bond ETFSPIB1,942,32569,030,230.50iShares Intermediate-Term Corporate Bond ETFIGIB997,13457,973,370.76SPDR Portfolio Short Term Corporate Bond ETFSPSB1,339,34541,613,449.15iShares Broad US Dollar Investment Grade Corporate Bond ETFUSIG616,59335,922,708.18VanEck Vectors Fallen Angel High Yield Bond ETFANGL410,58511,106,324.25Xtrackers US Dollar High Yield Corporate Bond ETFHYLB240,99611,006,287.32iShares 0-5 Year Investment Grade Corporate Bond ETFSLQD198,06410,208,218.56iShares 0-5 Year High Yield Corporate Bond ETFSHYG171,8377,175,913.12iShares Broad US Dollar High Yield Corporate Bond ETFUSHY104,9793,884,223.00

Source: Federal Reserve

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