Fixed Income ETFs Set New $325 Billion Record
With $1.01 trillion of net inflows for the year, ETFs are sure to break the 2024 record of $1.1 trillion, likely in November. However, with $325 billion of new money as of October 15, fixed income ETFs have already hit a new milestone for the year. For all of 2024, fixed income ETFs gathered $303 billion.
This year’s fixed income leaderboard includes a mix of funds offering low-cost broad market exposure, ultra-short Treasury exposure, and actively managed products. Let’s take a closer look.
SGOV: A Cash Alternative
The iShares 0-3 Month Treasury Bond ETF (SGOV) is the most popular ETF, adding $29 billion. The fund is about as low risk as you can find in the ETF market, with an average duration of 0.1 year and ownership of government bonds.
SGOV sports a 30-day SEC yield of 4.1% and has achieved a total return of 3.4% for the year. Following a rate cut in September, the Fed is expected to cut rates again later this month. For many investors, SGOV has been a cash alternative.
Index ETFs Still Serving as Core for Many Investors
The Vanguard Total Bond Market ETF (BND) and the iShares Core US Aggregate Bond ETF (AGG) are the second- and fifth-most-popular fixed income ETFs this year. BND has added $15 billion, while AGG pulled in $8.9 billion. Both offer low-cost, broad exposure to investment-grade U.S. bonds.
There is a slight difference in their underlying benchmarks, but AGG and BND primarily own U.S. Treasuries, agency bonds, and high-quality corporate bonds. The pair of funds incur an average duration of just under six years and yields of 4.2%. This duration exposure has been a key factor, helping the ETFs achieve a 7% gain for the year.
Meanwhile, the Vanguard Total International Bond ETF (BNDX) was the fourth-most-popular ETF. BNDX’s $9.2 billion in net inflows was slightly ahead of AGG’s. While international equity ETFs have outpaced U.S.-focused counterparts in 2025, BNDX’s gain of 3.3% has notably lagged BND.
BNDX primarily owns sovereign bonds issued by countries in Asia and Europe, with a mix of developed and emerging markets. BNDX sports a 30-day SEC yield of 3.0% and has an average duration of seven years. For many investors, AGG, BND, and BNDX have served as core building blocks in a portfolio to counterbalance equity exposure.
Beat Rather Than Replicate the Benchmark
Actively managed fixed income ETFs have continued to garner attention this year. The Janus Henderson AAA CLO ETF (JAAA) has led this pack with $9.3 billion. The ETF celebrated its five-year anniversary last week with $26 billion in total assets — a testament to the impressive cash haul this year. JAAA sports a 5.4% yield and limited interest rate sensitivity. The fund was up 3.8% for the year.
Meanwhile, the iShares Flexible Income Active ETF (BINC) and the JPMorgan Ultra-Short Income ETF (JPST) have pulled in $6.2 billion and $6.1 billion, respectively, in 2025. BINC is a multisector ETF offering exposure to sectors outside of AGG such as collateralized loan obligations, emerging markets, and high yield credit. BINC compensated for the added risk with a 5.1% yield and has risen 6.3% for the year.
JPST is akin to SGOV but actively invests in more than Treasuries. Investment-grade corporates and asset-backed securities made up most of the fund’s portfolio. JPST’s duration was 0.7 years and its yield was 4.2%. The ETF was up 4.1% for the year.
What’s Ahead for 2026?
I made a few media appearances last week, and the topic of what to look for in 2026 came up. Both times I answered about my excitement for innovation in the fixed income ETF market. I expect actively managed fixed income ETFs to continue to gain traction. However, I think there is room for innovation in the fixed income index world.
VettaFi acquired the Credit Suisse bond indexing business in February 2024, and we are working on some exciting innovations. Many people have turned to active fixed income ETFs for good reason. The Bloomberg Aggregate index, used by AGG and BND, is often criticized because it is debt-weighted and holds mostly U.S. government bonds. VettaFi is working on alternative fixed income approaches that focus on liquidity and provide targeted ratings or yields likely to be tied to ETFs in the near future.
Rosenbluth Discusses Fixed Income ETFs on Yahoo Finance
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