Global bond funds have witnessed a significant surge in inflows as yields hit new peaks this year, as reported by BlackRock. In the first three quarters of 2023 alone, over $235 billion was invested in global fixed-income exchange-traded products, marking a 38% increase from the same period in 2022 when the inflow was $170 billion. This surge in bond investments began with the “Great Yield Reset” in 2022, leading to a renewed interest in bonds as a source of income. By 2023, bonds were being viewed as a stabilizing force in investment portfolios, as highlighted in BlackRock’s Q4 forward-looking report.
BlackRock Fixed Income Growth in AUM
ETF Newz Says:
The rise in yields can be attributed to the Federal Reserve’s decision to increase interest rates, a move aimed at curbing the persistent inflation in the U.S. This decision led to the yield on the 10-year U.S. Treasury note soaring to over 4% by the end of September 2023, a significant jump from the 1% yield recorded in September 2021. Vasiliki Pachatouridi, the head of iShares fixed-income product strategy, anticipates more strategic fixed income reallocations, especially as we approach the peak of central bank hiking cycles in developed markets. The goal for many investors is to capitalize on the current decade-high yields.