Record $170 Billion Has Flooded Into Bond ETFs Thanks to Fed

After rocky March, funds have already surpassed 2019 inflows
Central bank’s buys spurred front-running, built confidence

The Marriner S. Eccles Federal Reserve building in Washington, D.C.
Photographer: Stefani Reynolds/Bloomberg

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By Claire Ballentine and Casey Wagner

October 12, 2020 at 7:00 AM EDT

Updated on

October 12, 2020 at 10:48 AM EDT

This article is for subscribers only.

Things were looking pretty bleak back in March for bond exchange-traded funds. The Covid-19 selloff created a liquidity crunch that drove their prices to trade at deep discounts to the value of the underlying assets. Skeptics questioned whether these products could ever be trusted again.

Then the Federal Reserve stepped in. On March 23, it announced that that it would begin buying corporate debt ETFs. This ignited a wave of front-running investments and served as a stamp of approval for the market sector.