BlackRock has revealed that iShares fixed income ETFs have reached US$1 trillion in assets globally.
According to the firm, this milestone comes only a year after the global bond ETF industry surpassed US$2 trillion.
As such, BlackRock believes industry growth will continue to accelerate, with global bond ETF assets under management poised to reach US$6 trillion by 2030.
“We’re extremely proud that BlackRock was a pioneer in this space, introducing the first fixed income ETF more than 20 years ago. Their invention has transformed the global fixed income market by allowing investors to buy and sell entire portfolios of bonds on stock exchanges with just a few clicks,” James Waterworth, BlackRock Australia’s director for wealth distribution, said.
Waterworth underscored that this momentum is mirrored in the local ETF market.
“Bond ETFs have equally transformed the Australian markets, making it easier for investors to adjust their fixed income portfolio in real time and democratising the local fixed income market – which was traditionally difficult to access for retail investors.”
According to the investment manager, Australia’s bond ETF industry has grown at an average annual rate of 43 per cent since 2013, surpassing $28 billion in assets under management in July.
“This illustrates the degree to which Australian investors have embraced the convenience, efficiency and transparency that bond ETFs offer,” Waterworth said.
BlackRock maintains a broad fixed income range in Australia, managing more than $5 billion across 13 cash and bond ETFs.
Last month the firm announced its intent to launch what has now become its longest duration exposure available within the locally listed product range – the iShares 20+ Year US Treasury Bond ETF (AUD Hedged) (ULTB) – offering Australian investors more precise fixed income investment options for their portfolio.
At the time, Waterworth noted that bond yields globally are at decade-highs.
“We believe investors have a window of opportunity to move out of cash and into fixed income exposures to lock in these higher yields, because the market has tended to price in changes to cash rates well before they occur.”
Moreover, fixed income ETFs constitute some 14 per cent of the total Australian ETF market, Global X data also recently revealed, up from the 7 per cent market share they held 10 years ago.
According to the ETF provider, a challenging climate has triggered investors to opt for more low-cost investment options that offer reliable returns, and ETFs have stolen the limelight from managed funds in what has been a “pivotal moment” for fixed income.
“ETFs have democratised access to this asset class, making fixed income easier, more liquid and cheaper to manage,” Global X has highlighted.
