Bond ETFs draw in record USD 300 billion in 2023 – BlackRock

LONDON, Jan 3 – Bond exchange-traded funds (ETFs) gathered an annual record of USD 300 billion of assets under management in 2023, BlackRock said on Wednesday, as investors were lured in by the highest yields in decades.

BlackRock, the world’s biggest asset manager, said it expects bond ETFs to grow to USD 6 trillion under management by 2030, from just over USD 2 trillion currently.

It took 17 years from BlackRock’s launch of the first bond ETF in 2002 for the market to raise USD 1 trillion, but just three more years to double that amount to USD 2 trillion by July of last year.

Bond yields surged last year as central banks raised interest rates to tame inflation, making fixed-income funds look more attractive than they had in years.

Strategists and investors have said ETFs offer benefits over more traditional mutual funds, including that they trade throughout the day and typically have lower fees.

Data shows that mutual funds have been losing ground to ETFs in the bond market. US fixed-income mutual fund assets peaked in November 2021 at USD 5.6 trillion, according to ICI data, but had fallen to around USD 4.6 trillion by the summer of 2023.

(Reporting by Harry Robertson; editing by Dhara Ranasinghe)