Over the first quarter, U.S. bond ETFs gathered $15.6 billion in net inflows, with government bond ETFs leading by sector after attracting $7 billion, followed by broad funds $4.8 billion, international $2.3 billion and active short funds $2 billion.

Looking ahead, BlackRock sees opportunity in international bond ETFs and smart beta bond strategies. Investors may diversify a U.S.-centric portfolio with international bond ETF exposure. Additionally, given the rising rate environment ahead, some are looking into smart beta bond ETFs that may better hedge market risks and still maintain upside potential.

“We see fixed income investors looking beyond domestic to global markets for diversification purposes, making efficient currency hedging important,” Brownlie said.

“Investors are continuing to look at fixed income smart beta strategies,” she added.

For more information on the fixed-income market, visit our Fixed Income Channel.