investors turn to etps for fixed income

Fixed income ETPs have surged in number in the past four years, as investors increasingly turn to an indexed approach for the fixed income element of their portfolios.

investors turn to etps for fixed income


Since 2007, 469 new products have launched – 110 in this year alone – according to Kevin Feldman, managing director at BlackRock.

Their growth in popularity as a way of accessing bond strategies has seen ETPs grow to represent a third (33%) of all new money flowing into bond strategies so far this year.

This compares to just 11% of all new money in 2009 and 10% in 2010.

To the end of November, fixed income ETPs have seen inflows of $43.6bn, representing almost a third (31.6%) of inflows into the ETP industry as a whole. At the same stage last year fixed income ETPs had seen inflows of $39.5bn, which accounted for a 27.1% of the industry as a whole.

Feldman said: "In the current and extended low-yield environment, ETPs are attracting huge interest from fixed income investors who are keen to maximise yield and manage their costs.

"In turn the number of fixed income ETPs on offer has mushroomed from 122 in 2007 to 591 today, with more than 110 launched in this year alone, and this growth in product range is likely to continue.

"Providers are looking at ways they can offer both broad and niche exposures to global bond markets and this will allow investors to implement customised fixed income asset allocations that mix sector, geographies and risk profiles, much as they do for equities."

In November the global ETP industry saw outflows of $0.6bn, which Blackrock put down to the ‘wait and see’ approach many investors are taking that sees them re-allocating assets rather than committing new money.