Bringing you live news and features since 2006 

Fixed income ETFs see assets rise in transformative year


Extreme volatility in the world’s asset classes in early 2020 saw fixed income ETFs emerge covered in glory. Salim Ramji, Global head of iShares and Index Investments at BlackRock published the firm’s fixed income report in July saying: “Liquidity, price discovery, usage and transaction costs were severely challenged across multiple asset classes in the bond markets, from high yield and investment grade corporates to emerging markets and even – for a brief period – US Treasuries.

“It was the long-awaited test for fixed income ETFs – they passed. Through the stresses, the largest and most heavily traded fixed income ETFs performed as our institutional clients hoped they would, by providing more liquidity, greater transparency and lower transaction costs than the underlying bond market.”

Fixed income ETF trading surged through the volatility partly because investors tend to move to fixed income in times of uncertainty and also because of their trust that fixed income in ETF form would be able to hold up as efficient and effective tools for rebalancing holdings, hedging portfolios and managing risk.

From late February through late March 2020, iShares UCITS fixed income ETF trading surged to USD17.5 billion on average, more than twice the 2019 weekly average of USD7.8 billion. Trading volume in UCITS high yield fixed income ETFs averaged as much as USD620 million per day in March 2020 with USD13.4 billion traded in total over the month.

“For comparison, high yield UCITS ETFs averaged USD290 million per day in 2019. The trend was similar in UCITS investment grade corporate ETFs where trading in March 2020 averaged USD1.67 billion per day, giving a monthly total of USD36.3 billion compared to USD740 million daily average in 2019,” Ramji says.

At a recent Morningstar Investment Conference, BlackRock chief executive Larry Fink said: “We’re seeing more and more active investors using ETFs for active management. They go in and out of passive exposures through ETFs, and the biggest transformation of that is in fixed income. The fixed income market will be substantially more of an ETF market in the future.”

Currently, actively managed bond ETFs represent nearly one-tenth of the USD1trillion market, according to The actively managed bond sector has enjoyed 13.4 per cent, or USD20.4 billion of the USD152 billion that has come into fixed income ETFs.

Back to that market turmoil in March, and the US Federal Reserve put its faith in ETFs, announcing that as part of its measures to steady the financial markets, it would be buying investment grade credit ETFs. This validation and the smooth operation of fixed income ETFs have encouraged assets to rise.

The great search for yield in a near-zero environment and the efficiency of actively managed fixed income ETFs has also attracted investors. The fixed income ETF world is becoming increasingly sophisticated with its offerings, actively picking and choosing among bonds to produce specific returns, aimed at investors who need yield in a low yield world. 

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by