According to data from Bloomberg, high yield ETFs saw $5.2bn inflows in the US in April, the highest monthly inflows since 2015.
The story was similar for European-listed high yield ETFs which witnessed $1.3bn inflows in the same period reversing the $5.1bn outflows seen over the past two months.
The reverse in flows can be attributed to the US central bank which expanded its bond-buying remit at the start of April to include corporate debt that had recently been downgraded.
Following the Fed’s announcement investors have looked to front-run the central bank’s purchases by gaining exposure to the largest high yield ETFs on the market.
The $19.9bn iShares iBoxx High Yield Corporate Bond ETF (HYG), for example, saw record monthly inflows of $3.6bn in April.
The Fed’s scope to purchase ETFs for the first time in its history comes as it expands its balance sheet to a record $6trn and beyond in response to concerns about the long-term impact of coronavirus.
As part of the plan, the central bank will purchase debt that has been downgraded to BB-/Ba3 before 23 March, a niche area of the market known as fallen angels.
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