Invesco pulls $1bn into US Treasury ETF amid ‘subdued’ rate outlook

Invesco has seen over $1bn flows into its US Treasury Bond 7-10 Year UCITS ETF (TRE7) since launch on 11 January.

TRE7 was launched as part of the firm’s US Treasury range, which offers investors exposure to 1-3 years, 3-7 years, 7-10 years or broad exposure across the full maturity spectrum.

The reason for the high inflows into TRE7, Paul Syms, head of EMEA ETF fixed income product management at Invesco, was due to a more subdued outlook for US interest rates, meaning investors have been more confident to move further out the maturity spectrum this year.

Only on Wednesday (20 March), the Federal Reserve held interest rates between 2.25% and 2.5%, pointing to no further rate hikes this year despite a strong domestic outlook.

Fed chair Jerome Powell warned weakening Chinese growth and concerns around the UK leaving the European Union were acting as a deterrent for US growth.

Syms commented: “We expect this demand to continue given the wider market and risk environment and the competitive nature of these products.

“Highly rated bonds are valued for their ‘safe haven’ status and could be increasingly attractive for any investor who is concerned about recession or market volatility.”

The range is listed on the London Stock Exchange and physically replicates the relevant Bloomberg Barclays US Treasury indices.

On Wednesday, ETF Stream revealed Invesco is set to list two gilt ETFs on the London Stock Exchange with total expense ratios (TERs) of 0.06%.

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