FOR PROFESSIONAL CLIENTS ONLY
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested
As we brace for a new regime of greater macro-led volatility, the adoption of fixed income ETFs continues to grow with investors using them for access, liquidity and managing risks.
A movement that started with one bond ETF has now grown to USD 1.8 trillion in assets under management (AUM) and more than 1,400 products around the world across the industry.* We believe ETFs will continue to play an integral role for investors looking to access and navigate today’s bond markets. Users typically choose fixed income ETFs over single bonds because they offer access to a basket of bonds, ensure portfolio diversification and provide liquidity benefits during volatile and illiquid markets.
Bond ETFs simplified how investors all over the globe access fixed income markets. Twenty years ago, it would have been difficult if not impossible to even imagine instantaneously buying or selling thousands of bonds in a single trade at a transparent price—exactly what bond ETFs have empowered investors to do. Bond ETFs have brought transparency, access, liquidity, and efficiency to millions of fixed income investors.
Today, millions of individuals and financial advisors use ETFs for convenient, low-cost exposure to thousands of global bonds, while large discretionary wealth managers, asset managers, and asset owners use a broad array of bond ETFs to make specialised calibrations to their multibillion-dollar portfolios.
We believe that tripling global AUM is achievable this decade, and the acceleration in bond ETF adoption will be fuelled by four powerful trends that broaden and deepen their usage:
1 – Advanced portfolio construction approach: More investors are blending bond ETFs with active strategies that seek to meet investment objectives and avoid unwanted risks.
2 – Catalysts for modernising bond markets: Bond ETFs are reshaping fixed income market structure by helping to drive bond markets electronification and automated trading.
3 – Increasingly precise sources of potential returns: New bond ETFs are providing more precise fixed income exposures that allow investors to build increasingly customisable portfolios and capture opportunities.
4 – Tools for seeking active returns: Sophisticated investors including active asset managers are turning to bond ETFs for transparency, access, liquidity, and portfolio efficiency.
The future looks bright for the growth of bond ETFs because they help investors take on the thorniest of problems in fixed income. In fact, we think that the current challenges associated with high inflation and rising interest rates will attract more first-time fixed income ETF investors and prompt existing investors to find new ways to use these versatile investment tools.
*Source: BlackRock and Bloomberg (as of February 28, 2023).
Find out more
Capital at risk. When interest rates rise, there is usually a decline in the market value of bonds, and the issuer of the bond may not be able to repay and make interest payments. The value of investments and the income from them are not guaranteed.
Important Information
This material is for distribution to Professional Clients (as defined by the Financial Conduct Authority or MiFID Rules) only and should not be relied upon by any other persons.
Issued by BlackRock Advisors (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL, Tel: +44 (0)20 7743 3000. Registered in England and Wales No. 00796793. For your protection, calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock. © 2023 BlackRock, Inc. All Rights reserved. 2892502
