New survey results suggest wealth managers of all types are turning to bond ETFs to quickly fill holes in their client portfolios.
“In the wake of the financial crisis, with bond issuance down and many fixed income trading partners pulling back from the markets, many institutions have found it difficult to execute trades and manage appropriate allocations in fixed income,” commented Matt Tucker, Head of iShares Fixed Income Strategy for the Americas while discussing the Greenwich Fixed Income ETF survey
. “Investors are seeing fixed income ETFs as essential instruments for accessing the bond market, alongside individual bonds and derivatives.”
Since 2008, fixed income ETFs have seen the volume of trades in the U.S. increase by 33 per cent per annum while U.S. fixed income ETF assets have grown 32 percent annually to $297 billion. The thinking is fixed-income ETFs can provide clients with single-trade bond diversification.
Greenwich Associates’ survey suggests 57 per cent of the respondents prefer iShares/BlackRock fixed-income ETFs compared to 24 per cent for Vanguard and nine per cent for State Street.
When it comes to using fixed income ETFs, the survey found that 93% of the respondents are satisfied with their trading experience while 98% say they wouldn’t hesitate to invest in them in the future.
A participant in the survey put it succinctly.
“We use ETFs to fill out when we can’t find individual bonds.”