In Flip-Flop Week, ETN That Sank Below $1 Sees Best-Ever Inflows

(Bloomberg) -- A flood of cash into some battered exchange-traded products may not be the cure for liquidity fears. But, at least for now, some of them are taking a breather.

Earlier this week, the historic collapse in oil prices almost wiped out an exchange-traded note that provides magnified exposure to swings in crude. While the sell-off sent the VelocityShares 3x Long Crude Oil ETN below $1 on Thursday, massive inflows are now driving the notes to their best weekly cash intake on record.

There’s also some relief among funds tracking corporate bonds, just a day after concern over liquidity stress in broader markets sent prices to persistent and deep discounts to the value of the underlying assets.

Here are some highlights for the week:

Oil

  • The VelocityShares 3x Long Crude Oil ETN, ticker UWT, narrowly escaped a “trigger event” that could jeopardize its future, after plunging 71% on Monday. But the notes saw a sixth straight day of inflows, totaling $430 million, according to data compiled by Bloomberg. It was up as much as 19% on Friday.
  • Another industry product, the United States Oil Fund LP, has attracted more than $582 million over the last four days, on track for its best week since 2015. The $1.5 billion fund, ticker USO, dropped more than 25% on Monday.
In Flip-Flop Week, ETN That Sank Below $1 Sees Best-Ever Inflows

Corporate Bonds

  • As liquidity fears subside, at least temporarily, the iShares iBoxx High Yield Corporate Bond ETF, ticker HYG, is up 1.2% after plunging for two straight days.
  • Another popular corporate bond fund, the iShares iBoxx Investment Grade Corporate Bond ETF, or LQD, climbed 4.4%, trimming its weekly slide to 8.3%.
In Flip-Flop Week, ETN That Sank Below $1 Sees Best-Ever Inflows

Longer-Dated Treasuries

  • BlackRock’s iShares U.S. Treasury Bond, ticker GOVT, posted a record one-day outflow on Thursday, losing almost $1.2 billion, as the selling frenzy reached longer-dated U.S. government bonds. Earlier this week, the $16.7 billion fund took in about $541 million.
  • It’s a similar story for iShares 20+ Year Treasury Bond ETF, ticker TLT, which lost a bit more than $605 million in the past two days after taking in $132 million Tuesday.
In Flip-Flop Week, ETN That Sank Below $1 Sees Best-Ever Inflows

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