Bond ETFs Weather April Volatility, Bring in $10B of New AUM
- Bond mutual funds were hit hard in April, losing roughly $60 billion in AUM.
- Bond ETFs, on the other hand, experienced $10 billion of inflows.
Market volatility driven by tariff uncertainty hit bond mutual funds hard in April: Investors pulled roughly $60 billion from these funds—the largest outflows since 2022, according to Bloomberg. Bond ETFs, on the other hand, experienced $10 billion inflows.
The exchange-traded fund wrapper tends to be cheaper, more liquid and more transparent than its mutual fund counterpart, offering a heightened appeal to money managers, especially during market turmoil.
Fixed Income Rebalancing
"The tariff tantrum caused a sizable correction in equities. While equity indices flirted with bear market drawdowns, fixed income returns remained positive on the year,” Thomas Urano, co-CIO and managing partner at Sage Advisory, told etf.com. “As such, we saw significant rebalancing flows out of fixed income into equities across multiple balanced portfolio platforms.”
The bond market performance served as a proper portfolio diversified, allowing for portfolio rebalancing when asset allocation weights drifted offsides, Urano added.
Investors Still Look to Bond ETFs
While there’s no fixed-income class in the mutual-fund wrapper that hasn’t experienced outflows of late, according to Bloomberg, ETFs are faring much better. The JPMorgan Core Plus Bond ETF (JCPB), for instance, experienced $177.5 million of net inflows in April, ETF.com data show.
The flow story is different for the more expensive, actively managed fixed-income ETFs. The JPMorgan Ultra-Short Income ETF (JPST) and Janus Henderson AAA CLO ETF (JAAA) experienced net outflows in April, according to ETF.com data, of 904.3 million and 1.1 billion, respectively.
