Last week there was a net inflow of $1.2m bond ETFs surveyed by YieldReport. The largest flow was to the BetaShares High Interest Cash fund but in percentage terms the flow was quite modest, with the largest percentage inflow going into iShares UBS government Inflation Index fund, which gained nearly 1% in funds under management.
The only fund to show any meaningful outflow was the Russell Australian Semi-Government Bond fund which lost a little under 0.50% of the fund value.
In recent months famous investors such as Bill Gross and Carl Icahn have criticised ETFs on the grounds of potential liquidity problems. George Soros has voted his approval for the structure by switching some direct Chinese investments to index ETFs
Soros uses ETFs to switch from active to passive
George Soros is famous for forcing the Bank of England out of the European Exchange Rate Mechanism (the forerunner to the euro) and he has been long recognised as one of the world’s sharpest investors. Recently, he almost totally sold out of Chinese internet companies Alibaba and Baidu but he maintained an exposure to Chinese markets by buying units in iShares China Large Cap ETF and iShares MSCI Emerging Markets ETF which are both unhedged for currency. His move is an interesting one given the criticism of liquidity in ETFs in recent times by Bill Gross and Carl Icahn.
ASX CASH & BOND ETFS*
|1m (%)||1y (%)||MER (%)||FUND
|BetaShares Aust High Int Cash||AAA||50.14||0.21||3.03||0.18||706.06|
|SPDR S&P/ASX Aust Bond||BOND||26.02||1.41||6.88||0.24||15.78|
|SPDR S&P/ASX Aust Govt Bond||GOVT||25.90||1.53||7.24||0.22||5.22|
|iShares Composite Bond ETF||IAF||105.36||1.29||6.51||0.24||222.67|
|iShares Treasury ETF||IGB||103.26||1.40||6.66||0.26||16.24|
|iShares Govt Inflation ETF||ILB||114.10||1.51||7.52||0.26||36.97|
|Russell Aust Select Corp Bond ETF||RCB||20.34||n/a||4.51||0.28||85.65|
|Russell Aust Govt Bond ETF||RGB||21.25||n/a||8.18||0.24||144.28|
|Russell Aust Semi-Govt Bond ETF||RSM||20.63||n/a||5.98||0.26||118.09|
|Vanguard Aust Fxd Int Index ETF||VAF||49.77||n/a||n/a||0.2||224.91|
|Vanguard Aust Govt Bond Index ETF||VGB||48.83||n/a||n/a||0.2||53.38|