Bond ETF Investors Seek Havens as Virus Offsets Trade Optimism

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Investors in bond exchange-traded funds kicked off the year on a cautious note as the coronavirus outbreak tempered optimism about the U.S.-China trade deal.

More than $1.8 billion flowed into government-bond ETFs in January, the most in three months, data compiled by Bloomberg show. Municipal debt also proved popular, attracting the most in more than a year, while strategies focused on investment-grade notes added $15.6 billion, the biggest intake since June. By contrast, high-yield bond funds saw their first outflows since August.

Traders chose to hide-out in debt that matures in several years, with intermediate and long-term strategies both seeing a jump in inflows. Funds owning debt that comes due in a decade or longer absorbed the most since September, while those in the three- to 10-year range added more than $3 billion.

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