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Bond ETFs With $1 Trillion Shrug as Fed Starts to Withdraw

  • Fed to begin unwinding its $8.6 billion ETF holdings on Monday
  • Central bank’s ETF buys showed ‘faith in the structure’: Nadig
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The Federal Reserve delivered such a gift to the exchange-traded fund industry amid the throes of the pandemic that analysts say its exit will hardly be felt.

The central bank on Monday will start reversing its surprise decision last March to scoop up bond ETFs as part of efforts to keep credit flowing amid the coronavirus crash. That move ushered a surge of inflows into bond ETFs, meaning that even though the Fed itself ended up buying just $8.6 billion of debt funds, the market ballooned to be worth $1.1 trillion.