Investors Pile Into Ultra-Short Term Bonds ETFs

Currently, President Trump’s economic policies are fanning the flames of concerns regarding a recession and a sell-off in the stock markets, and investors are pumping money into Ultra-Short Term Bonds ETFs*. Led by products such as the iShares 0 – 3 Month Treasury ETF, this sector has received in excess of USD 16 Billion since January 1st 2025 with iShares 0-3 Month Treasury accounting for circa USD 7 Billion. Last week March 3rd – March 8th 2025, data reveals that the iShares ETF received USD 1.4 Billion recording the largest inflow of funds to date.

*Ultra-Short Term Bonds – These are bond funds that invest only in fixed income instruments with very short-term maturities. Such instruments will have maturities of less than one year and are usually defined as government or corporate bonds, CDs (Certificates of Deposits), commercial paper, and money market funds.

*Ultra-Short Term Bonds ETFs (Exchange Traded Funds) – These funds are designed for investors who are focused on reserving assets but would also like to earn income. Utilising short-term investment grade corporate, bonds, government bonds and money market instruments, these ETFs aim to best returns on cash and your typical money market funds without incurring substantially more risk.

Data provided by experts show that lay-offs in the US federal workforce, softening economic data and President Trump’s on-again, off-again tariff war on the allies and top trading partners of the United States has fuelled a sell-off in the stock market. Indeed, since election day of November 5th 2024, President Trump and the rest of the financial markets has seen all the gains since that day on the S&P 500 Index completely wiped out. Furthermore, economic models provided by a number of investment banks and other such luminaries, suggest that the risk of a recession in the US economy is on the up.

During times of volatility and turbulence in stock markets those ETFs with short-dated maturities tend to receive an accelerated amount of incoming funds. Data received shows that from 2013 during downturn months in the S&P 500, flows into the above-mentioned funds were circa USD 2.7 Billion, and during the up-turn months funds received were circa USD 440 Million.

Elsewhere in the week through March 5th 2025, Global Money Market Funds witnessed a huge inflow of funds, and data provided by LSEG Lipper* showed the amount received as USD 61.32 Billion, with a net inflow of USD 39.55 Billion the week before. Many commentators and experts attribute this inflow to President Trump escalating his trade war by imposing steeper tariffs on imports from China, Mexico, and Canada.

*LSEG Lipper – provides global independent fund performance data, in a precise granular fund classification system, and includes mutual funds, CEFS (Closed-End Funds), ETFs, hedge funds, domestic retirement funds, pension funds, and insurance products.

Experts have suggested that President Trump has put the strength of the economy on the backburner while he pursues his political goals and agendas. This could turn out to be a massive mistake as more and more analysts, experts, and economists, suggest that his somewhat outdated “America First” platform is knocking confidence and weighing on confidence. Indeed, an increasing number of economists had revised downwards their growth predictions with warnings that Trumpenomics and his trade wars are proving more damaging to the US economy than first anticipated.

Furthermore, the R word is beginning to be used more and more with many feeling that a recession could soon be appearing on the horizon. Furthermore, when asked that very question on Sunday 9th March 2025, President Trump declined to rule out the possibility that the US Economy could indeed fall into recession.