Bond ETFs Attracted A Record $300 Billion In 2023

Bond exchange-traded funds (ETFs) had a banner year in 2023, attracting a record $300 billion U.S. of investor capital, according to data from BlackRock (BLK).

BlackRock, the world's biggest asset manager, said that investors around the world were drawn to bond ETFs last year by the highest yields in decades.

Going forward, BlackRock forecasts that bond ETFs will grow to $6 trillion U.S. of assets under management by 2030, which would be triple the $2 trillion U.S. that’s currently being managed.

Bond yields surged throughout 2023 as central banks around the world raise interest rates to help lower inflation, making fixed income investment vehicles attractive to investors.

Short-dated U.S. Treasuries currently offer yields of 5.3% and 4.8% for six- and 12-month bonds respectively.

Exchange-traded funds offer several advantages over mutual funds, including that they trade throughout the day and charge lower fees.

Data shows that mutual funds have been losing ground to ETFs within the bond market.

U.S. fixed income mutual fund assets peaked in November 2021 at $5.6 trillion U.S., according to data from ICI, but had fallen to around $4.6 trillion U.S. by last summer.

BlackRock’s stock has gained 9% over the last 12 months and currently trades at $784.15 U.S. per share.