The fresh inflows bring the year-to-date record to $15.8bn, an all-time high. Year-to-date fixed income ETF net inflows are more than a third higher than in the same period in 2015. Investment-grade bonds were especially popular, recording $2.8bn in inflows globally.
“However, this flow rally could fizzle out once the ECB hits its limit of corporate bond support and/or the Fed hikes aggressively,” warned Ursula Marchioni, chief strategist for iShares at Blackrock.
The popularity of fixed income ETFs contrasts strongly with the continuing outflows from its equity peers. Emerging market and European equity ETFs both saw net redemptions of $5bn in May. These outflows were concentrated in Europe and the US.
As you can see on the graph above, equity ETFs are on course to record their lowest net inflows in years in 2016, while fixed income flows are set for a record-breaking year.