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Graphic: Global debt ETFs see biggest decline in net assets since at least 2002

·2 min read
Arrangement of various world currencies including Chinese Yuan, US Dollar, Euro, British Pound

(Reuters) - Global bond ETFs saw the biggest quarterly fall in the value of their holdings in at least 19 years during January-March as yields across markets spiked on expectations of a quick economic recovery from the coronavirus pandemic and inflation.

According to Refinitiv data, the combined net assets of 1,719 global bond ETFs tracked by Lipper fell to $1.48 trillion at the end of March, from $1.53 trillion at the end of December.

That fall of about $52 billion in the first quarter was the biggest since at least September 2002, which is the earliest such data available.

The iShares iBoxx $ Inv Grade Corporate Bond ETF saw an erosion of over $13 billion in net assets, while the iShares 20+ Year Treasury Bond ETF and the iShares iBoxx $ High Yield Corporate Bond ETF witnessed over $4 billion drop in their net assets each last quarter.

Global bond ETFs saw their asset size grow last year as bonds rallied on the back of unprecedented stimulus pumped by the U.S. Federal Reserve and other major central banks support their economies during the pandemic.

The data showed bond ETFs received an inflow of $47.8 billion in the March quarter, which was the lowest in a year.

A recent Reuters poll showed that another bond market sell-off is likely to happen in the next three months, although analysts did not predict a runaway rise in sovereign yields.

The U.S 10-year yield was trading at 1.632% on Thurday, falling further from the 14-month high of 1.726% touched at the end of last month.

Quarterly ETF flows https://tmsnrt.rs/31VgjEJ

Biggest ETF outflows https://tmsnrt.rs/3cV7L73

Biggest decline in net assets https://tmsnrt.rs/3sVLUC2

(Reporting By Patturaja Murugaboopathy; Editing by Vidya Ranganathan and Bernadette Baum)