Although U.S. stocks are soaring to record highs, fixed income exchange traded funds are the apples of investors’ eyes.

Data confirm as much. Last month, bond ETFs hauled in a record $17.7 billion in new assets even as the S&P 500 jumped more than 3%. That easily topped the previous monthly inflows record of $17 billion, set in February for bond ETFs. [Bond ETFs Dominate October Flows]

That trend remains in place as investors, anticipating that the Federal Reserve will boost interest rates sometime next year, are gobbling up ultra-low duration funds.

“Inflows into ultra-short exchange-traded bond funds, which typically invest in Treasury bills, short-term corporate securities and other debt, have risen this quarter by $4 billion, or 35 percent, to $15.9 billion. That is more than double the inflows into long-term bonds, which have seen growth of $1.4 billion since the start of October, to $18.4 billion,” reports Cordell Eddings for Bloomberg.

Of the top-10 ETFs in terms of new assets added in the fourth quarter, five are bond funds and of those five, three fit the bill as low or ultra-low duration offerings. With an effective duration of just 0.46 years, the iShares Short Treasury Bond ETF (NYSE: SHV) has added nearly $3.5 billion in new assets this quarter. That is nearly $1 billion more than the Vanguard S&P 500 ETF (NYSEArca: VOO).

The iShares Barclays 1-3 Year Treasury Bond Fund (NYSEArca: SHY) has added over $2 billion in new assets during the current quarter, outpacing the inflows to all but five ETFs. [Room for Growth for Bond ETFs]

Investors are also embracing shorter duration high-yield options. The SPDR Barclays Short Term High Yield Bond ETF (NSYEArca: SJNK), which has a 30-day SEC yield of 5.13% and a modified adjusted duration of 2.3 years, has added nearly $414 million this quarter.

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