Industry Updates

Investors pile into high yield ETFs following Pfizer coronavirus vaccine news

IEAC saw $513.1m inflows over past week

George Geddes

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Investors have turned to higher risk ETFs following the double boost of a potential coronavirus vaccine and Joe Biden's victory in the US election.

In particular, investors have shifted into high yield and corporate bond ETFs, two asset classes that have suffered significant outflows the weeks leading up to the US election as a second wave of coronavirus spread through Europe.

Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence, commented: “There has been a noteworthy reversal for high yield and credit ETFs which saw impressive inflows over the past two days after a bad month of flows in October.”

The iShares Core € Corp Bond UCITS ETF (IEAC) and the iShares € High Yield Corp Bond UCITS ETF (IHYG) saw the second and fourth-largest inflows across all European-listed ETFs, according to Bloomberg.

IEAC captured $513.1m for the period with $173.1m inflows over the past day while IHYG received $384.5m in the last week.  

These inflows are now offsetting the significantly large outflows the ETFs suffered in October as IEAC and IHYG have seen outflows of -$1.3bn and -$293m over the past month, respectively.

The shift in assets is most likely due to investors' confidence over the past week of news, according to Psarofagis.

ETFs exposed to Pfizer jump on coronavirus vaccine boost

“The change in flows momentum feels more like investors shifting to risk on,” he said. “This is following the news of a vaccine from Pfizer which could suggest a faster recovery.”

Markets rallied following the breakthrough announcement from Pfizer earlier this week that it has successfully tested a 90% effective COVID-19 vaccine.

Unsurprisingly, this news along with Biden's victory in the US presidential election has seen US equity ETFs also topping the flows table for the last week.

Ahead of IEAC, the iShares Core S&P 500 UCITS ETF (CSPX) saw $577.8m inflows over the past seven days. The inflows come in tandem with the VIX reaching its lowest level since August which suggests volatility is easing.

However, with that said, the VIX remains slightly elevated for the year at around 23 points on Wednesday, up from 12.5 points at the beginning of the year.

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