Italy’s political turmoil has exchange-traded fund investors tracking U.S. Treasuries as they wait for the market to find its direction with yields and stock market volatility whipsawing.
Investors added more than $636 million to the Schwab U.S. TIPS ETF, ticker SCHP, on Tuesday, the most ever for the fund and more than triple the second-largest inflow since its inception. The fund tracks an index of U.S. Treasury inflation-protected securities that have at least one year remaining in maturity.
The Schwab Intermediate-Term U.S. Treasury ETF, ticker SCHR, took in over $475 million on Tuesday, also a record for the fund. It tracks an index of U.S. Treasury bonds with remaining maturity of three to 10 years.
“It’s definitely a flight to safety,” Aaron Clark, portfolio manager at Boston-based GW&K Investment Management, said by phone. “Some memories are fresh with Greece and the issues that Europe was having in general, and the U.S. is always a sort of quality trade in scenarios like that.”
But with yields now climbing and volatility calming, it remains to be seen how ETF investors reacted to the reversal.
This article was provided by Bloomberg News.