Powered by MOMENTUM MEDIA

Bond ETF assets to double: BlackRock

— 1 minute read

Global bond ETFs are well positioned to double to $2.8 trillion within the next five years, according to the head of a local BlackRock subsidiary.

Global bond ETF assets are currently growing at 20 per cent annually, the investment manager noted, five times the rate of other open-end bonds.

The bond ETF sector reached a milestone $1.4 trillion (US$1 trillion) global assets under administration in June, BlackRock reported, yet it still represents less than 1 per cent of the total $149.7 trillion (US$105 trillion) global fixed income marketplace.

Advertisement
Advertisement

Although it took nearly two decades for bond ETFs to surpass $1.4 trillion in global assets, Christian Obrist, head of iShares Australia, believes the next leg of growth will be faster.

“Investors are increasingly looking for alternative investment options to act as a shock absorber to their portfolios during periods of market volatility,” Mr Obrist said.

“ETFs bring convenience and transparency to a historically hard-to-navigate asset class and bond ETFs have transformed how investors can access fixed income by providing precision and transparency. At iShares, we see a tremendous runway for the growth of global ETFs.”

Australian investors are also adopting bond ETFs, with the Reserve Bank of Australia indicating further cash rates, he added.

“Following the recent cash rate cut and the RBA signalling further cuts this year, we can expect term deposit rates will continue to dwindle,” Mr Obrist noted.

“This makes bond ETFs an attractive option for individuals who currently have lazy cash sitting in bank savings accounts that could be potentially earning a higher return.”

Investors have realised bond ETFs are an efficient way to access different sources of return and manage risk, iShares said.

Mr Obrist commented: “Individuals can use bond ETFs to help generate predictable income through laddering, while professional portfolio managers can use high-yield bond ETFs alongside individual securities in actively managed funds.

“Hedge funds can use ETFs for targeted long and short positions. In all cases, bond ETFs make it easy to build and manage fixed income allocations.”

 

Bond ETF assets to double: BlackRock
investordaily image
ID logo
Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

Sarah has a dual bachelor's degree in science and journalism from the University of Queensland.

You can contact her on [email protected].

related articles

  • Fortunes flag for Perpetual

    Perpetual Investment’s funds under management (FUM) have decreased by $1.1 billion over the last quarter as the market continues its move ...

  • ETPs to surpass $60bn

    The Australian exchange-traded product (ETP) industry is likely to reach $60 billion by the end of the year according to one provider, with ...

  • EMD needs specialists, not generalists

    Investors interested in emerging market debt (EMD) should employ specialist managers in order to succeed, according to a report from Willis ...

promoted stories

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.