Bond ETF’s market share remains small but observers anticipate a growth story ahead.

“The fixed income ETF story is a very exciting one,” Stephen Cohen, head of BlackRock’s iShares ETF business in Europe, the Middle East and Africa, told the Financial Times, add that assets will increase their market share of the overall pile of exchange-traded vehicles as well as continue to grow in absolute terms.

Part of the more promising outlook for the fixed-income ETF space may be associated to the overall popularity of passive investment strategies that has branched out beyond the equity wrapper. It also reflects the increased awareness of ETFs and how indexing and fixed income can work together, Cohen argued. Many investors were “more comfortable” with the products.

Looking further ahead, the US Federal Reserve is raising interest rates and the European Central Bank is scaling back monetary stimulus. Nevertheless, Cohen argued that regardless of how major policymakers act, “the adoption of fixed-income ETFs will happen anyway,” as the bond industry adapts.

For more information on the fixed-income space, visit our bond ETFs category.