U.S. Treasury exchange traded funds enjoyed large gains in 2011 as investors fretted over deflation and the Eurozone debt crisis. However, corporate bonds could lead the way this year in fixed-income ETFs if investors regain their appetite for risk.

ETFs tracking corporate bonds include iShares iBoxx Investment Grade Corporate Bond ETF (NYSEArca: LQD), iShares 1-3 Year Credit Bond (NYSEArca: CSJ) and Vanguard Short-Term Corporate Bond ETF (NasdaqGM: VCSH).

Total assets under management for U.S. fixed-income ETFs gained about $41.3 billion, or a 29% growth increase for 2011, according to BlackRock data. [Treasury ETFs Lead 2011]

Due to the slow economic growth in the U.S. and heightened volatility, investors searched for defensive sectors and safe havens. Investors that took a buy-and-hold strategy to Treasury bond ETFs were rewarded in 2011. Market timers that had exited bonds prematurely were penalized on speculation that yields were on the rise. [ETF Chart of the Day: U.S. Treasury Bonds]

As the Eurozone debt crisis is rages on, investors are scared and will continue to seek the safe-haven appeal of the bond market with the benefit of some yield. Investors have taken to funds such as the iShares Barclays TIPS Bond Fund (NYSEArca: TIP), which focuses on Treasury Inflation Protected Securities, and has risen 8.4% in 2011, reports Deborah Levine for MarketWatch.

What’s more, “asset managers and pension plans are using Treasury ETFs to gain exposure to rates” in 2011, reports the iShares blog.