$57.5 Billion Flows into Ultra-Short Treasury ETFs

Funds in U.S. Treasury ETFs are shifting from intermediate maturities to ultra-short and long maturities. On September 2, $18.2 billion flowed into the iShares 0-3 Month U.S. Treasury ETF (SGOV), and $4.6 billion into the iShares 1-3 Year U.S. Treasury ETF (SHY). On the same day, $32.8 billion also flowed into the Vanguard S&P 500 ETF (VOO). As of August 31, SGOV had a one-month net inflow of $57.5 billion, while the iShares 20+ Year U.S. Treasury ETF (TLT) saw $54.6 billion. In contrast, the iShares 7-10 Year U.S. Treasury ETF (IEF) recorded a net outflow of $5.2 billion. According to BlackRock, SGOV tracks U.S. Treasury securities with maturities of 0-3 months, while TLT tracks U.S. Treasuries with maturities over 20 years. Recent fund flows have concentrated on ultra-short and long-duration products, showing a 'barbell' pattern as intermediate maturities decline. On September 4, the increase in U.S. employment in August and rising oil prices impacted the bond market, leading to an inflow of $4.5 billion into short-term and Treasury funds. Investor sentiment towards TLT shifted from 'bearish' to 'neutral'. The key takeaway is that funds are not disappearing from Treasury ETFs, but rather the maturity selection has changed.

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