NEW YORK - BlackRock (NYSE:BLK)'s iShares 20+ Year Treasury Bond ETF (NYSEARCA:NASDAQ:TLT), often compared to meme stocks for its significant inflows despite poor performance, has attracted over $20 billion in new assets throughout 2023. This influx comes even though the fund experienced a cumulative return of -48% since interest rates hit their lowest point in 2020.
By late October, TLT's net asset value had suffered a sharp decline from a high of $161 to just around $83. Despite this drop, investors continued to invest in the fund, betting on an economic downturn and the prospect of a return to a more normalized yield curve.
In November, the fund showed signs of recovery, with the net asset value per share bouncing back to approximately $89.72. This rebound coincided with a slight easing of the 10-year Treasury yield to about 4.5% from its earlier peak of 5%. The easing inflation and growing optimism regarding potential Federal Reserve rate cuts next year have spurred investors to extend the duration of their fixed income investments at today's relatively higher rates.
As of yesterday, while TLT lagged, other major market indices reported positive gains for the year. The S&P 500 index climbed by 17.3%, the Dow Jones Industrial Average increased by 5.6%, and the Nasdaq Composite Index surged by 34.8%. These gains unfolded even as the central bank maintained its policy rates at a high range of 5.25% to 5.5% since July, indicating a diverse market sentiment across different asset classes.
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