The disproportionate outflows among the ETFs compared with the mutual funds shows that the funds truly are “‘fast money’ and could leave quickly,” wrote credit strategists led by Eric Beinstein at JPMorgan in a Feb. 14 note.
“Institutional money in particular is moving out of these,” Tchir said, noting that the ETFs are typically restricted to buying the most-actively traded bonds from the largest issuers, which have benefitted disproportionately from last year’s inflows. “People are either shifting into the smaller issuers or those that don’t fit these indices particularly well.”