Although the first ETFs were stock-based funds, the fixed-income side of the business is rapidly catching up as nervous investors continue to shun equities and pile into the perceived safety of bonds.
BlackRock’s iShares predicts that assets in global fixed-income ETFs will grow to over $2 trillion from $302 billion currently, over the next decade.
In the U.S., iShares forecasts that the bond ETF segment will likely grow to $1.4 trillion from $222 billion.
“The dynamic forces driving the long-term expansion of the fixed income ETF market have been especially evident this year, with the market attracting some of its strongest asset flows to date,” said Jennifer Grancio, head of iShares global business development at BlackRock. “Yet even after a decade of continuous growth, fixed income ETFs are still just scratching the surface of their potential.”
Risk-averse investors are favoring bond ETFs over equities. Fixed-income ETFs listed in the U.S. have gathered $35.1 million year to date, according to data from the ETF Industry Association. [Bond ETFs Remain Top Draw in June]