- Firm saw $27 billion of first-quarter inflows to fixed income
- Fink says clients turning to these ETFs as substitute for cash
BlackRock Inc.’s Laurence D. Fink said fixed income exchange-traded funds, which have trailed their stock counterparts in asset growth, are becoming increasingly popular among investors.
At BlackRock, more than $27 billion of first-quarter inflows came from bond ETFs, driving the firm’s $36.1 billion of net long-term inflows. Overall, the industry saw record inflows during the quarter of $43.7 billion to global fixed-income ETFs.
Fixed-income ETFs are benefiting from the negative interest rate policies in Europe and Japan as investors search for yield. While investors initially sought to diminish risk by investing in government bond ETFs they’ve now pushed into corporate and emerging market fixed-income ETFs.
"I believe fixed-income ETFs will continue to drive more growth," Fink, the firm’s chief executive, said in an interview with Bloomberg on Thursday.
Bond managers were slower to face the threat from indexing. But as interest rates have plunged, even small expense savings can be meaningful to investors who switch to index funds. As recently as 2012, active taxable-bond funds attracted three times as much money as passive ones. Since then, bond pickers have suffered outflows each year while index trackers have seen surging inflows.
"We believe the utilization of fixed-income ETFS are going to be larger in the coming years," Fink said on a company conference call today.