The Vanguard Short-Term Corporate Bond ETF (VCSH) has seen about $5.5bn of outflows thus far in 2023. The ETF is on track for 15 consecutive weeks of outflows and this marks the largest outflow in any comparable period since the ETF’s inception in 2009, as per Bloomberg. The ETF tracks investment grade (IG) bonds with a 1-5Y maturity, and is on track for 15 consecutive weeks of outflows. Bloomberg notes that this move coincides with the inflows seen in money market funds (MMF) this year following the Fed’s rate hikes that saw MMF yields rise. Lindsay Rosner, a PM at PGIM said, “If you compare the yield on VCSH and you look at a money market, you can reduce duration, spread duration, and vol coming in the curve and maybe even pick up yield”. She added that concerns of the US debt ceiling breach and about the Fed pausing may slowly see some rotation out of MMFs.

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