Remember last year when there were only six fixed income exchange traded fund (ETF) options? ETF providers have certainly been working to increase the offering in this area, as there are now 30 bond-focused funds to choose from and 40 more in the pipeline, according to Murray Coleman of Dow Jones Newswires.
Fixed-income products represent about 5% of the ETF market, leaving room for growth; especially as baby boomers age and look to a larger bond allocation in their portfolios. The Investment Company Institute reports net inflow for the first nine months into bond ETFs was $8.4 billion. In the past 12 months inflows have risen 127%.
Fixed-income ETFs range from short-term treasury to high yield to municipal to international bonds. The best selling bond ETF this year is the iShares Lehman 1-3 Year Treasury Bond Fund (SHY), which is up 3.2% year-to-date.
For full disclosure, some of Tom Lydon’s clients own SHY.
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