Bond ETF Assets Climb to Record as Investors Seek Out Liquidity

Holdings in bond exchange-traded funds climbed to records in Europe and the U.S., spurred by ease of trading and the lure of higher yields in emerging markets.

Bond ETFs now manage $428 billion in the U.S. and $150 billion in Europe, according to BlackRock Inc. The iShares Core U.S. Aggregate Bond ETF also became the first fixed-income ETF to surpass $40 billion in assets, the New York-based investment company said.

Globally, bond ETFs have had the fastest growth since 2012, with $99.7 billion of inflows, helped by record emerging-market investments and central-bank purchases driving up bond demand in Europe. The funds, which track debt indexes and trade like stocks, have also gained popularity as investors seek liquid investments amid a slowdown in bond-market trading.

European Central Bank President Mario Draghi’s corporate-bond buying program fostered ETF investments in the region, with BlackRock’s five largest European corporate-debt funds receiving $1.9 billion of inflows last quarter.

Industrywide, investors poured a record $5.8 billion into funds focused on emerging-market bonds last quarter, BlackRock said. That boosted the year-to-date tally to $12.7 billion, compared with 2012’s full-year record of $8.3 billion.

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