The run-up in yields has pushed ETF investors to flee typical bond proxies. The iShares Cohen & Steers REIT ETF, or ICF, saw its biggest outflow ever Monday, losing more than $464 million. The outflow reduced the fund’s assets by 19 percent. The iShares U.S. Real Estate ETF, or IYR, lost $87 million on Monday following a week of record outflows that totaled more than $834 million. It’s already on pace this month to lose the most since April 2015.
“The real estate sector has sold off to start October, as investors have sold out of high-dividend yielding bond proxies,” said Todd Rosenbluth, director of ETF research at CFRA Research. “Further, the large-cap REITs that are well-represented in these ETFs are expected to generate below-average earnings in the second half of the year.”
Municipal Bonds
The Vanguard Tax-Exempt Bond ETF, or VTEB, is the market’s third-largest fund tracking municipal bonds. It got hit with a massive outflow of over $25 million on Monday, the biggest since the $3.6 billion fund launched in 2015. Investors also yanked record cash from BlackRock’s $9.5 billion iShares National Muni Bond ETF, the largest muni ETF, last week. State and local debt has posted a nearly 1 percent loss this year after mounting fears over rising interest rates prompted a sell-off last week.
This article was provided by Bloomberg News.