A version of this story previously ran in Financial Advisor IQ's sister publication, Ignites.
Some of BlackRock's best-known bond ETFs have suffered massive outflows this year in spite of near-record inflows for bond ETFs industrywide, the Financial Times reports.
The firm's $39.3 billion iBoxx $ Investment Grade Corporate Bond ETF, $19.5 billion iBoxx $ High Yield Corporate Bond ETF and $13.8 billion Short Treasury Bond ETF have recorded year-to-date net outflows ranging from 22% to 25% of assets, according to FactSet data cited by the FT.
The outflows, collectively amounting to $23.8 billion, outrank those of any other U.S. bond ETF. Peer funds, in fact, have reaped robust inflows.
“We are on track for potentially another record-breaking year, breaking 2020’s net inflows record, but the heavyweight products from BlackRock have not been the driver,” Todd Rosenbluth, head of ETF and mutual fund research at CFRA Research, told the FT.
So far this year, U.S. fixed-income ETFs have taken in $161 billion industrywide, or 13% of the current $1.2 trillion in such assets, FactSet shows. Equity ETFs, meanwhile, have added 9.2%.
Vanguard has claimed $61 billion of the new cash, lifted by its hot-selling $82 billion Total Bond Market and $42.5 billion Short-Term Bond ETFs.
The two firms' big divergence in flows stems from their "different audiences," Rosenbluth said. iShares ETFs are typically more favored by institutional investors and Vanguard's by buy-and-hold retail and wealth management clients, he noted.
Another factor could be the Federal Reserve’s liquidation of the bond ETF positions it built up last year to help stabilize the fixed-income market, said Ben Johnson, director of global ETF research at Morningstar.
BlackRock's iBoxx $ Investment Grade Corporate Bond was among the beneficiaries of the Fed buying.
However, the Fed also bought, and subsequently sold, Vanguard's $42.1 billion Short-Term Corporate Bond ETF, and that fund has taken in $6.4 billion in new cash this year, FactSet's data shows.
In addition to their buy-and-hold popularity, Vanguard's ETFs have also benefited from an internal effort to nudge mutual fund investors to transfer to parallel ETFs, noted Elisabeth Kashner, director of global fund analytics at FactSet.
“So not all of [the inflow] is new money,” Kashner told the FT.