Fixed income ETFs only account for 2.0% of the total investable fixed income universe globally.1 It is a young market, but has seen robust growth in more recent years.
Adopted long after their equity-based counterparts, there remain a number of myths around the liquidity, risk levels and trading challenges of these funds. We seek to shatter these myths and explain the fixed income ETF structure.
Our latest report identifies and analyses the eight most common misconceptions associated with fixed income ETFs, including their impact on the overall bond market, performance compared to active managers (for mainstream and niche exposures) and implicit overweight to the most indebted companies.
Fiction #1: The fixed income ETF market has become so large it distorts the bond market
Despite their rapid growth, fixed income ETFs still only represent 2.0% of the total investable fixed income universe globally.1 Flows have been strong but they have not occurred solely at the expense of other types of existing investment vehicles - they have grown the overall market.
Because these instruments still represent a relatively small portion of sub -asset classes within the fixed income market, their impact on market prices is limited.