“Flows for Europe and Japan, as well as broad developed markets (EAFE), have benefitted significantly from currency-hedgedequity funds, which had a record month gathering $13.4bn. This trend is expected to persist. The consensus is the U.S. dollar is in the midst of a strengthening cycle and these cycles have historically lasted for six to seven years,” said BlackRock.

Over the past month, 10-year Treasury yields have fallen 13.4%, a slide that has helped fixed income ETFs maintain an already torrid pace of asset-gathering. Fixed income ETFs had net inflows of $35.7 billion including almost $19 billion into investment grade and high yield ETFs.  With this strong start to the year, fixed income ETFs are on track for another record year, according to BlackRock.

Still, the only bond ETF in the top 10 for first-quarter inflows was the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEArca: HYG). According to Moody’s, default risk was only at 1.7%, compared to 17.3% in March 2009, with 184 issuers on the junk list, compared to 290 issuers in 2009. [Investors Return to Junk Bond ETFs]

Tom Lydon’s clients own shares of HEDJ and HYG.