US insurers' fixed income ETF holdings drop by 12%

Written by Adam Cadle

31/03/2023

US insurers’ fixed income ETF holdings totalled $7.5bn as of YE 2022, down from $8.5bn in 2021, according to Fitch Ratings.

This $1bn decline, or 12%, is due to a mix of market volatility and ETF redemption activities of $303bn for the year and is largely in line with the broad market’s decline of around 15% during the same period. Expecting continued rate hikes, insurers sought higher yields and rotated approximately $214bn out of high-yield and into corporate fixed income ETFs in 2022.

European and US ETFs, with aggregate AuM increased 8% in Q4 2022 in tandem with a total ETF increase of 11%. European-domiciled fixed income ETF AuM was up 13% qoq in Q4 2022, whilst US-domiciled fixed income ETF AuM was up 7%. Inflationary pressures, continued rising rates and the deteriorating market environment are believed to have led to the increase in inflows as investors look to diversify.

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