BlackRock has said it expects global bond exchange traded fund (ETF) assets will double to US$2 trillion by 2024 as investors are looking to diversify risk by gaining more exposure to both global equities and bonds.
Currently, global bond ETF assets are growing at 20 per cent annually which is five times the rate of other open-end bond focus funds, according to the firm.
Christian Obrist, head of iShares, Australia, said one of the reasons global bond ETF assets were well positioned to double by 2024 was the fact they offered an attractive option for individuals who had “lazy cash sitting in bank savings accounts that could be potentially earning a higher return.
“ETFs bring convenience and transparency to a historically hard-to-navigate asset class and bond ETFs have transformed how investors can access fixed income by providing precision and transparency. At iShares, we see a tremendous runway for the growth of bond ETFs.
“It took nearly two decades for bond ETFs to surpass $US1 trillion in global assets, however, I believe that the next leg of growth will be swifter,” he said.
Additionally, hedge funds could use ETFs for targeted long and short positions, Obrist said.
“In all cases, bond ETFs make it easy to build and manage fixed income allocations.”