BlackRock Euro Corporate ETF Pulls in $2B in 2024

European fund's inflows surge as investors bet on as many as six ECB rate cuts this year.

Reviewed by: Ron Day
Edited by: Staff

BlackRock’s euro corporate bond ETF has extended its hot streak into 2024 after raking in over $2 billion of assets in the first three weeks of the year.

Investors poured $2.1 billion into the iShares Core € Corp Bond UCITS ETF (IEAC) since the turn of the year to 23 January, according to data from ETFbook, as they continue to bet on numerous European Central Bank (ECB) rate cuts throughout 2024. New York-based BlackRock Inc.'s iShares unit is the world's biggest issuer of exchange-traded funds, with $2.58 billion in 429 ETFs traded on the U.S. markets and dozens more issued in Europe. 

The fresh slug of inflows come after IEAC recorded the second-highest inflows of any ETF in Europe last year, pulling in $5 billion. The ETF now houses $19.6 billion assets under management.

IEAC, which has an effective duration of 4.4 years, returned 8% in 2023. However, the inflows come despite a tough start to the year for the asset class, with IEAC falling 2.3% year to date.

Demand was seen across other euro corporate bond ETFs in Europe with money markets expecting the ECB to cut rates by as much as 157 basis points (bps) this year, roughly six cuts of 25 bps each.

BlackRock Europe ETFs

The $5.4 billion Amundi Index Euro Corporate SRI UCITS ETF (ECRP) saw inflows of $218 million over the same period, while the iShares € Corp Bond ESG UCITS ETF (SUOE) recorded inflows of $162 million.

The attractive yields on offer combined with a structurally shorter duration versus U.S. bonds could also be seen as a key driver.

 "Experience shows that low growth rates and the prospect of interest rate cuts are a good environment for investment-grade corporate bonds," Oliver Eichmann, head of rates fixed income EMEA at DWS, said.

“Our favorites are euro investment-grade corporate bonds," he said. "Favorable valuations and high yields should attract more capital. Interest rate premiums are likely to fall somewhat.”

Theo Andrew joined ETF Stream as a senior reporter in September 2021. He has over four years of investment writing experience spanning pensions and retail investments, most recently at Citywire, where he was a senior reporter covering environmental, social and governance investing.