Investment-Grade Bond Fund Saw Record Outflows Amid Market Rout

(Bloomberg) -- Top rated bonds weren’t immune from the indiscriminate selling that saw $31 billion in assets exit exchange-traded funds during last week’s market turmoil.

The world’s third largest fixed-income ETF -- the iShares iBoxx $ Investment Grade Corporate Bond ETF (ticker LQD) -- suffered a record $2 billion in outflows from Monday to Friday, the most among U.S.-listed debt exchange-traded products.

At 5.5 percent, that’s LQD’s largest ever withdrawal, and its largest withdrawal as a share of total assets. The $34-billion ETF, which holds high-grade, dollar-denominated U.S. debt, outperformed products that own stocks, junk bonds, and even long-dated Treasuries. But that wasn’t enough to stem the flood of outflows.

The fund also endured a so-called death cross on Thursday, as its 50-day moving average fell below the 200-day trend.

To contact the reporter on this story: Luke Kawa in New York at lkawa@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Eric J. Weiner, Joanna Ossinger

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