Global fixed income ETFs saw an immense increase in popularity in the final quarter of 2016 as investors sought to diversify their portfolios, according to Vanguard Investments.
The company noted in its most recent Quarterly ETF Report that Australian global fixed income ETFs received almost half of their yearly inflows in the December quarter alone.
“These flows indicate a recognition of the importance of global fixed income assets in a diversified portfolio,” the company said.
"Exposure to this asset class through ETFs has only been possible for Australian investors for just over a year, and Vanguard expects investor interest in global fixed income will continue to grow.”
Vanguard said the high inflows to fixed income ETFs in the final quarter of the year reflected the adoption of a "defensive strategy" as investors "continued to move out of commodity and currency products in the final quarter of 2016".
The company said the US election had been the “key event” that shaped markets during the December quarter, which resulted in Republican nominee Donald Trump becoming President, as well as his party acquiring majorities in both the House of Representatives and the Senate for the first time in eight years.
“US markets reacted positively to the result, pushing the S&P 500 Index (2,200 points) and Dow Jones Index (19,999 points) to the highest levels ever recorded,” the company said.
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