Fixed Income ETFs Are Having Their Moment

Inflation and fears of it have boosted the popularity of the asset class.

Reviewed by: Lisa Barr
Edited by: Lisa Barr

Higher yields, a greater acceptance among investors and a more generous uptake among financial advisors and institutional investors have been boosting the popularity of fixed income ETFs.  

That’s according to a recent report in Cerulli Edge, from the financial consultancy Cerulli. The newsletter wrote that 66% cite greater advisor familiarity will be a big driver of the asset class’s growth in the next two years, with 55% attributing the same for institutional investors.  

In addition, 38% of the respondents attributed the popularity to fixed income’s higher yields and advisors’ need to avail themselves of lower-cost fixed income exposures. 

The product development of fixed income among issuers is also taking priority over U.S. equities. The breakdown of fixed income over U.S. stocks is 66% versus 57%, respectively, noted Cerulli. 

Another reason for growth is that in a market offering fixed income game plans, there is now more room for revenue generation linked with active exposures, even if managers need to cut their prices in the ETF industry, according to Daniil Shapiro, CFA, a Cerulli director.  

“This optimism is underscored by the perception of a virtuous cycle by which a greater variety of quality and appropriately priced exposures help make fixed income ETFs a go-to for a broader set of investors,” he added. 

Renewed Interest in Fixed Income ETFs 

Financial advisor Robin Giles isn’t surprised by this new trend. because fixed income ETFs offer a place for investors to park their funds so that they avoid inflation cutting into their funds’ value.  

“Inflation has also been a factor when people have clearly seen the value of their cash erode over the past two years,” Giles, CFP, and founder of Apex Wealth Management in Katy, Texas, told 

Brandon Gibson, CFP and wealth manager of Gibson Wealth Management in Houston noted that this shift doesn’t impact his practice, because he “chooses ETFs for clients based on a risk-based asset allocation approach.”  

Yet he sees sound reasons for the renewed popularity in fixed income ETFs, because interest rates are now higher than they were a few years ago. Even better, “a new product will not have 2022’s negative performance to show,” he added. 


Follow Michelle Lodge on Twitter @lodgemich 

Michelle Lodge is a journalist who is a contributor to many sites: Fortune, Money, Time, Barron’s, Investopedia, and