January 2024 is likely to be remembered for the strong launch of 10 new spot bitcoin ETFs and the uplisting of the Grayscale Bitcoin ETF (GBTC). While we continue to support advisor education about cryptocurrency investing, there are other ETF trends emerging in the first few weeks of the year. Some of these are already part of the Exchange conference agenda.
Investment-Grade Corporate Bonds Are in Vogue
It was a tough 2023 for intermediate-term bond ETFs in a rising rate environment. However, these ETFs have been much more popular to start 2024, with rate cuts likely on the horizon. Intermediate-term bond ETFs take on some interest rate, while offering high-quality bond exposure.
The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) had $4.9 billion of net outflows in 2023. However, all of this and more flowed into LQD in the beginning of the new year. The fund had net inflows of $5.5 billion year to date as of January 17, boosting its asset base to $37 billion. LQD has an average duration of approximately eight years and sports an SEC yield of 5.0%.
The Vanguard Intermediate Term Corporate Bond ETF (VCIT) had net outflows of $650 million through the first nine months of 2023. Yet as investors gained more comfort about potential rate cuts late last year, VCIT gained traction. The ETF had net inflows of $4.2 billion in the fourth quarter. In the first few weeks of 2024, VCIT gathered an additional $870 million. The fundnow manages $46 billion. I’m excited that Jeff Johnson, Vanguard’s head of fixed income product, will be on stage Monday at Exchange next month with Bloomberg’s Katie Greifeld.
The Invesco BulletShares 2028 Corporate Bond ETF (BSCS) pulled in over $150 million to start 2024, which is impressive for a $1.4 billion offering.