The global bond ETF industry achieved its best quarter on record with $44.5bn inflows in Q1 2017, remaining resilient despite a widely anticipated Fed rate hike in March. The previous record was set in Q1 2016 when the products attracted $42.5bn in assets……
Stephen Cohen, Head of Fixed Income Beta at BlackRock
Globally, iShares captured $20.3 billion, driven by investor appetite for investment grade credit, emerging market debt and treasury bond funds.
US investment grade credit: Despite a rate hike, US investment grade credit saw strong demand on the back of positive economic data. These sector saw $14.4bn of inflows.
Top TIPS: continuing the trend from the end of last year, investors continue to use inflation-linked exposures such as Treasury Inflation Protected Securities (TIPS) to protect portfolios against potential increases in inflation. TIPS ETFs globally attracted $3.6bn in flows during the first quarter.
The EM-pire strikes back: Following the US election, emerging market bond and equity ETFs saw large outflows driven by concerns over a rise in protectionism. This year, that situation has reversed, with flows intensifying over March, reaching $15.6bn inflows for the quarter.
While US investors remain happier with hard currency exposures, European investors were indifferent between dollar and local currency-denominated EM debt. Within the iShares European range emerging market debt ETFs, both local currency and hard currency, experienced the largest inflows of any asset class year to date.
Source all data: BlackRock Business Intelligence, as at 31 March 2017