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This type of ETF records near-record capital inflows and pays dividends

It is a type of ETF that is seeing near-record capital inflows.

New data shows that dividend exchange-traded funds totaled nearly $50 billion in new money in the first half of 2022, according to Todd Rosenbluth of VettaF, a financial services firm.

“We recently did a survey of VettaFi advisors, and dividend strategies were the most popular in terms of earnings,” the firm’s head of research told CNBC’s “ETF Edge” on Wednesday. “Higher than corporate bonds, higher than Treasuries, higher than more narrowly targeted sectors like real estate.”

Dividend and ultra-short bond ETFs are seeing heavy market activity on growing fears of a severe economic downturn and the growing appeal of traditionally safer investments. These funds are seen as the big winners in the first half of the year as investors searched for gains and security.

Rosenbluth also expects strong demand for dividend ETFs and ultra-short bonds in the second half, citing a “hawkish” Federal Reserve, high stock market volatility and investors looking for “relatively safe alternatives.” .

“Advisors and institutional investors are looking for strategies beyond traditional stock and bond funds this year,” he told CNBC.

Will Rhind, founder and CEO of GraniteShares, said his company sees people prioritizing cash while dealing with a potential recession.

“One of the big themes in the stock markets this year is that people are moving out of growth names that, you know, don’t usually pay out a lot of dividends – if anything at all – and into names that make money. “, said Rhind.

More dividend-paying stocks can equal more value play, he added.

Investment advisers view dividend strategies as a form of income, according to Rosenbluth. Its main reason: “cash-like strategies” on ultra-short bonds remain insensitive to interest rates on fixed income securities over short periods.

“We see that [ultrashort-bond ETF] the asset base is growing significantly, and that’s another one of those trends we’re seeing here at VettaFi,” he said.

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This type of ETF records near-record capital inflows and pays dividends

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