Exchange-traded fund sponsors will focus on the fixed-income space for a substantial number of launches in the near future.
Tom Anderson, head of ETF strategy and research at State Street Global Advisors, said that fixed-income ETFs are cheaper than their open-ended fund counterparts and perform well in a down market. This year through July 31, the S&P 500 is down 12.65% and the MSCI EAFE is down 13.4%, while the Lehman Aggregate Bond Index is up 1.05%.
"People have discovered that there are reasons to have bonds in a portfolio," Anderson said. He added that ETF sponsors will continue to look to areas outside of equities as they plan their next launches.
Fixed-income ETFs assets grew 5.4% in July to $46.5 billion and now represent more than 8% of total U.S. ETF assets, which stand at about $578 billion as of July 31, according to a recent SSGA study.
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