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Global bond ETFs see record year of inflows so far - BlackRock

Harry Robertson
·2 min read

By Harry Robertson

LONDON, Oct 9 (Reuters) - Investors have put a record amount of money into global bond exchange-traded products (ETPs) so far this year, attracted by the highest yields in more than a decade.

More than $235 billion flowed into global fixed income ETPs in the first three quarters of the year, well above the $170 billion seen in the same period in 2022, according to industry data gathered by BlackRock.

Exchange-traded funds (ETFs) are by far the most popular type of ETP. They are investment funds that pool customer money to invest in a range of securities and typically passively track an index.

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In July, bond ETFs surged to $2 trillion in assets under management for the first time. JPMorgan estimates the figure has increased roughly 20% each year over the past decade.

Global bond yields have soared over the last two years as central banks have hiked interest rates to try to tame inflation.

The yield on the 10-year U.S. Treasury note stood at 4.1% at the end of September, up from around 1.3% in September 2021. Yields move inversely to prices.

The juicier returns available on bonds has drawn investors towards the asset class - but it has been a painful bet for many as yields have continued to surge. The U.S. 10-year yield hit a 16-year high of 4.89% last week.

Brett Pybus, global co-head of iShares fixed income ETFs for BlackRock, said the data showed "the increasingly important role fixed income is playing in portfolios at current yield levels and in navigating volatility".

Unlike a mutual fund, which trades at the end of the day, investors can buy and sell shares in an ETF on an exchange throughout the session.

U.S. fixed income mutual fund assets peaked in November 2021 at $5.63 trillion, according to Investment Company Institute data, but stood at $4.61 trillion in the second quarter of 2023.

BlackRock's iShares section has drawn in roughly 35% of the flows into fixed income ETFs this year, the company said. (Reporting by Harry Robertson Editing by Mark Potter)