Investors in exchange-traded funds who last month put money to work in the fixed-income market showed a preference for government bonds, particularly those with short-term maturities, according to State Street Global Advisors. “Bonds took in just $10 billion in September, but 92% of those flows were driven by the $9 billion government bond exposures,” Matthew Bartolini, head of SPDR Americas research at State Street Global Advisors, said in a note on U.S.-listed ETF flows. Around $5 billion of the money flowing into government debt went to “ultra-short” bonds, he said.
Long-term Treasury bonds have been pummeled this year amid a surge in yields that continued Tuesday as investors faced the prospect of the Federal Reserve keeping interest rates higher for longer. Short-term Treasurys have fared better in 2023. Shares of the iShares 20+ Year Treasury Bond ETF
finished Tuesday down slightly more than 2%, bringing its loss this year to 12.4% on a total return basis, according to FactSet data. Meanwhile, the SPDR Bloomberg 1-3 Month T-Bill ETF
was little changed on Tuesday, with the fund returning a total 3.6% year to date, FactSet data show. And although shares of the iShares 1-3 Year Treasury Bond ETF
closed 0.1% lower Tuesday, the fund has posted a year-to-date gain of 1.4% on a total return basis. Read: ETFs that buy long-term Treasury bonds drop sharply after Fed signals higher for longer rates “Ultra-short and …