16/8/2010
By Sophie Baker
Fixed income exchange traded funds (ETFs) are in demand, with 23 per cent of all inflows in the European market attributed to these products in the first half of 2010, says iShares.
The ETF platform of BlackRock revealed that its European-domiciled fixed income ETFs range has surpassed $25bn in assets under management, and growth in the range has reached 44 per cent per year over the last two years.
Corporate bonds’ popularity also continued into 2010, with the largest fixed income ETF in Europe, the iShares Markit iBoxx Euro Corporate Bond, recording $4.5bn in assets.
Meanwhile, emerging market bonds have also seen interest over the last six months, and significant inflows have also been seen into government bond funds this year. ETFs, iShares said, have been increasingly used to manage sovereign credit risk, with strong flows into German government bond-relate ETFs as investors chose between Eurozone regions. The focus has also been on short-term government bonds rather that longer-dated maturities.
Investors are still choosing inflation-linked ETFs, a tactical choice that allows them to manage risk in this area of the market across the Eurozone, UK, US and globally.
“In early 2008, iShares predicted that global assets in fixed income ETFs would grow by over 200 per cent to surpass $200bn by 2011,” commented Alex Claringbull, senior portfolio manager at BlackRock. “The industry is well on course to meet this forecast, with AUM in fixed income ETFs globally standing at $189.9bn.”
