High yield bond ETFs are seeing a surge of inflows as risk appetites reignite. In November, US-listed high yield bond ETFs had $10.8 billion of inflows which surpassed the previous record of $8.6 billion in April of 2020. The inflows in November were enough to offset the $8.7 billion of outflows in the previous 3 months. Globally, there was $127.5 billion of inflows into ETFs which was the highest amount since December 2021.

There was strength across certain parts of the fixed income complex as investment grade corporate bond ETFs saw $10 billion inflows which is the most since January. In contrast, Treasuries saw their lowest levels of inflows since January 2022. There was a sharp decline from the $30.4 billion inflows in October to just $4.3 billion in November, a reflection of the U-turn in sentiment. 

According to Karim Chedid, head of investment strategy for BlackRock’s iShares arm in the Emea region, “Investors have cash to put to work, and if the assessment of the investment environment is better than expected, that dry powder can be put to work.” Another factor is that retail investors have many more low-cost options when it comes to high yield ETFs which seem like an ideal vehicle to take advantage of a ‘soft landing’ scenario which should be bullish for the asset class. 

Finsum: High yield ETFs saw a surge of inflows in November. Here are some of the reasons why the category should benefit from a soft landing.