Record-breaking Year for Bond ETFs in Europe

The funds have amassed $65 billion in net new assets year to date through mid-December.

Reviewed by: Staff
Edited by: Mark Nacinovich

This week saw fixed-income ETFs in Europe hit all-time-high annual inflows, breaking the previous record set in 2019.

Bond ETFs amassed $65 billion in net new assets by mid-December as investors chose ETFs to implement the "bonds-are-back" trade, after the asset class suffered one of its worst years in 2022.

While some broad bond indexes fell by up to 30% last year, November saw the Bloomberg Global Aggregate bond index gain 5%, marking its second-best month in 30 years.

Eyes now turn to when the Federal Reserve and other policymakers will start cutting rates, with 83% of professional investors in a recent ETF Stream survey stating 2024 would be the year of fixed income versus just 40% for equities.

Brexit Fragmentation Risks 

Next, three key issuers have yet to register their new Irish platforms in the U.K.—in an unintended consequence of Brexit.

Elsewhere, BNP Paribas Asset Management also launched its ICAV last year and is currently undergoing the lengthy process of registering in the U.K.

ETFs Gaining Over 100% 

Finally, three ETFs have gained over 100% this year, led by the VanEck Crypto & Blockchain Innovators UCITS ETF (DAPP) with 182% gains and followed by rival products from Global X and BlackRock.

While DAPP has a highly concentrated basket, Invesco’s blockchain ETF has almost twice as many constituents and has booked more modest gains of 33%, owing to its more tangential exposure to blockchain technologies.

Jamie started at ETF Stream as a reporter in January 2021. Previously, he was a senior journalist at the UK Investor Magazine, Investment Observer, UK Startup Magazine and UK Property Journal. He holds an undergraduate degree in politics and international relations, and a postgraduate degree in ethics.