The Federal Reserve has dis- closed the names of the ETFs it purchased in mid-May andthe size of those purchases, which werepart of its Secondary Market CorporateCredit Facility designed to support thecorporate bond market.
In total the Fed purchased $1.307billion worth of investment-grade andhigh-yield ETFs between May 12 andMay 19 from five ETF asset managers.Investment-grade ETFs accounted for83% of the assets.
Eight of the ETFs were from iShares,part of BlackRock, which manages theFed’s ETF purchase program; two fromVanguard; three from State Street GlobalAdvisors; and one each from Van Eckand Xtrackers, the ETF business ofDWS, a subsidiary of Deutsche Bank.
BlackRock, Vanguard and State Streetare the top three managers for ETF assets,in descending order, and coincidentallythe top three sponsors of ETF assetspurchased by the Fed, also in descending order. BlackRock, the world’s largestasset manager, has waived advisory feeson the ETFs that the Fed is buying.
Its iShares bond ETFs accounted for48% of the Fed’s ETF asset purchases;Vanguard, 34% and State Street 15%.
Questions have been raised about theconflict of interest in the Fed’ hiringBlackRock to run several of its bondpurchasing programs given the firm’soutsize role in the financial markets.Fed Chairman Jerome Powell told theSenate Banking Committee in May thatBlackRock was hired for its expertiseamid the Fed’s urgent need to arrangesupport structures for the bond market,which had been experiencing extremevolatility in March.
“This is a good list … a broad list,”
said Dave Nadig, chief investment officer
and director of research at ETF Flows,
about the list of ETFs that the Fed has
purchased. “It features good funds from
great companies. It would have been
very, very easy for them to have skipped
out on the funds from Van Eck and DWS.”
Since the Fed announced its pro-
grams to purchase individual corporate
bonds and ETFs in March, the bond
market, which was extremely volatile,
Bernice Napach is ThinkAdvisor.com’s seniorwriter and can be reached at firstname.lastname@example.org.
By Bernice Napach
Fed Reveals Which Bond ETFs It Purchased
In the lead spot is iShares from BlackRock, which manages several Fed
ETFs That Fed Purchased Through May 19, 2020
Ticker ETF Name
Market Value as of
May 19, 2020 (US$)
LQD iShares iBoxx US Dollar Investment Grade Corporate Bond ETF 2,521,892 326,282,386.96VCIT Vanguard Intermediate-Term Corporate Bond ETF 2,483,885 228,095,159.55VCSH Vanguard Short-Term Corporate Bond ETF 2,776,786 226,196,987.56HYG iShares iBoxx High Yield Corporate Bond ETF 1,255,084 100,657,736.80JNK SPDR Bloomberg Barclays High Yield Bond ETF 905,284 89,532,587.60IGSB iShares Short-Term Corporate Bond ETF 1,639,301 88,341,930.89SPIB SPDR Portfolio Intermediate-Term Corporate Bond ETF 1,942,325 69,030,230.50IGIB iShares Intermediate-Term Corporate Bond ETF 997,134 57,973,370.76SPSB SPDR Portfolio Short-Term Corporate Bond ETF 1,339,345 41,613.449.15USIG iShares Broad US Dollar Investment Grade Corporate Bond ETF 616,593 35,922,708.18ANGL VanEck Vectors Fallen Angel High Yield Bond ETF 410,585 11,106,324.25HYLB Xtrackers US Dollar High Yield Corporate Bond ETF 240,996 11,006,287.32SLQD iShares 0-5 Year Investment Grade Corporate Bond ETF 198,064 10,208,218.56SHYG iShares 0-5 Year High Yield Corporate Bond ETF 171,837 7,175,913.12USHY iShares Broad US Dollar High Yield Corporate Bond ETF 104,979 3,884,223.00Total 17,604,090 1,307,027,514.20Source: E TFGI, based on Federal Reserve data.