Cerulli Associates writes that as financial advisers increasingly find ways to incorporate fixed-income ETF solutions into their clients’ portfolios, ETF issuers have accelerated product development in recent years.
The firm writes that fixed-income ETFs have experienced steady growth in recent years, with assets in taxable fixed-income ETFs increasing from USD1.2 trillion in 2022 to nearly USD2 trillion at the end of 3Q 2025.
Tax-free fixed-income ETFs increased from USD106 billion to USD165 billion at the end of the third quarter. In the last three years, more than 300 new fixed-income ETFs were developed and the expectation that the products will significantly influence future flows is fuelling rapid product development in both passive fixed-income ETFs and, even more so, active solutions.
The growth in fixed-income ETF use is driven by several factors, including greater adviser familiarity with using ETFs for fixed income, a more favourable interest rate environment, and the development of a more diverse set of fixed-income ETF solutions by issuers.
“As ETF issuers expand their product lineups, they also continue to develop a more robust educational platform, providing advisers with additional resources to better understand how these products operate and behave in various market conditions. This has allowed advisers to become more comfortable and familiar with fixed-income ETFs,” says Kevin Lyons, senior analyst. According to the research, 71 per cent of ETF issuers identify greater adviser familiarity with fixed-income solutions as a top-three factor in driving fixed-income flows over the next two years.
Looking forward, 59 per cent of ETF issuers cite U.S. fixed income as a priority for product development. These initiatives span several subcategories—87 per cent of ETF issuers identify taxable fixed income as a chief priority, followed by international/global fixed income (65 per cent), municipal strategies (63 per cent), and defined outcome products (38 per cent).
“Key factors that ETF issuers expect will influence fixed-income ETF flows over the next two years include strong innovation in fixed-income products, fixed-income exposures paying higher yields, and greater advisor familiarity with fixed-income ETFs,” he concludes.
