Bond ETFs have attracted a record $525 billion in inflows this year, according to Nate Geraci, president of NovaDius Wealth Management. Despite these inflows, many bond categories are currently reporting losses, putting pressure on the 40% bond component of the traditional 60/40 investment portfolio.
Data from State Street Investment Management shows that US-listed bond ETFs recorded $469 billion in inflows through September. Geraci noted that over $75 billion entered fixed-income ETFs in the past month alone, with investors allocating capital across various maturities to capture yields exceeding 4%.
Market conditions have been influenced by the S&P 500 reaching an all-time high on October 6, while 10-year Treasury yields hit their highest levels since 2002. These factors have prompted some investors to explore managed futures ETFs, which trade futures contracts to hedge against market volatility.
Alternative ETFs attracted $31 billion through September, according to State Street. These instruments are increasingly viewed as a diversification tool, as they can short bonds or take long positions in assets like oil and the dollar when traditional portfolio components underperform.
