FYI: Bondholders have had a rude awakening in November. They are yanking money out of bond ETFs as a result, according to a Ned Davis research report.
Things were great for much of 2019. The main bond index, the Bloomberg Barclays US Aggregate, is up around 8% this year. It got a lift when the Federal Reserve changed course at the end of 2018, making it clear it was inclined to lower interest rates rather than raise them. Prices of bonds rise when rates fall, so the Fed’s three rate cuts this year lifted the index.
But rates started to spike this month, with the yield on the 10-year U.S. Treasury going from 1.7% to 1.9%. Early this week, the index was down 1% month to date; as of Wednesday, the loss was around 0.7%.
More than half of fixed-income exchange-traded funds have lost money over the last 50 days, according to the Ned Davis report. Investors have pulled more than a net $1 billion from the iShares 20+ Year Treasury Bond ETF (ticker: TLT), for example, in the past month alone.
Regards,
Ted
https://www.barrons.com/articles/bond-investors-yields-rates-redemptions-etfs-51573758606?refsec=bonds
