Another Milestone For Bond ETFs

In a year in which investors keep hunting for yield, fixed income exchange traded funds keep wracking up the milestones. As has been frequently noted in this space, four of this year's top 10 ETFs in terms of new assets added are bond funds, but the hits don't end there.

According to fresh data from BlackRock Inc. BLK, the world's largest asset manager, and parent company of iShares, the world's biggest ETF issuer, bond ETFs around the world now have $600 billion in assets under management.

While Vanguard seemingly gets all the press among ETF issuers when it comes to adding new assets, iShares is dominant force on the fixed income front. Of the nearly $23 billion added to global bond ETFs during the second quarter, iShares captured $11.9 billion of that total, including $4.7 billion in the U.S. Year-to-date, bond ETFs around the world have added $66.7 billion in new assets with $39.3 billion allocated to iShares funds, including $24.3 billion to the issuer's US-listed bond ETFs.

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With year-to-date inflows of $7.3 billion, a total exceeded by just one other ETF, the $39.4 billion iShares Core U.S. Aggregate Bond ETF AGG is the largest bond ETF. Following one of its largest one-day inflows last week, the $31.9 billion iShares iBoxx $ Investment Grade Corporate Bond ETF LQD is the world's second-largest bond ETF.

“iBoxx benchmarked ETFs, which ended the month with an all-time high of $107bn of assets under management, saw their largest single trading month on record in June. The 197 iBoxx tracking ETFs enjoyed a combined $27.6 billion of trading volume in June according to the Markit ETF analytics database. These volumes overtook the previous monthly record seen in December of last year when iBoxx benchmarked ETFs saw an aggregate $23.3 billion of trading volume,” according to a Markit note.

ETFs tracking iBoxx indexes include LQD and the iShares iBoxx $ High Yid Corp Bond HYG. 

As has also been noted here, investors are embracing the notion that inflation is rising faster than the Federal Reserve is forecasting, prompting inflows to Treasury inflation protected securities (TIPS) ETFs. The iShares TIPS Bond ETF TIP has added $3.4 billion in new assets this year, a total exceeded by just eight other ETFs.

Now home to $7.6 billion in assets under management, the iShares J.P. Morgan USD Emerging Markets Bond ETF EMB is the largest emerging markets bond fund in the world and that includes mutual funds.