New Report: How Fixed Income ETFs Are Shaping in 2024 So Far

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The Fixed Income ETF market reached new heights in 2024, surpassing €2.2 trillion in global AUM. This article, featuring key facts and figures from the Trackinsight Fixed Income Report Q3 2024—sponsored by AXA Investment Managers—explores the latest trends, regional dynamics, and shifts between active and passive strategies shaping both global and European markets.

The Fixed Income Landscape

The Fixed Income ETF industry has hit an impressive new milestone, surpassing €2.2 trillion in AUM as of Q3 2024—a remarkable leap from €333.6 billion in 2014, representing over a six-fold increase in just a decade. This rapid growth is fueled by consistent investor interest, with 2024’s net flows already reaching €286 billion, nearly on par with the previous year’s record-breaking inflows. The number of fixed income ETFs has also surged, expanding from 515 in 2014 to 2,549 today, reflecting the industry's push for more products as demand increases

Breakdown by Region

The Fixed Income ETF market shows a clear regional dominance, with America leading the way at €1.66 trillion in total AUM. Europe follows with a significant €449.5 billion, while the APAC region holds €84.5 billion.

By the end of Q3 2024, America led the way with €212.7 billion in net inflows, followed by Europe with €46.8 billion and APAC with €26.6 billion—both America and APAC have already surpassed their total inflows from last year, while Europe needs €15.6 billion to cross last year’s figure.

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Breakdown by Issuer type

Globally, government bond ETFs lead the market with €768.9 billion in assets under management, followed by aggregate bonds at €605.1 billion and corporate bonds at €580.3 billion.

In Europe, government bond ETFs also dominate with €205 billion, corporate bonds come next with €179 billion, while aggregate bonds hold €43.9 billion—highlighting a regional preference for sovereign and corporate debt over aggregate bonds.

Year-to-date by the end of Q3 2024, aggregate bond ETFs led global net inflows with €97.9 billion, indicating strong investor demand for broad fixed income exposure. Government and corporate bond ETFs followed closely, attracting €77.5 billion and €75 billion, respectively.

In Europe, government and corporate bond ETFs saw similar inflows of €17.97 billion and €17.25 billion, suggesting balanced interest in both sectors, while aggregate bond ETFs drew €3.88 billion.

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Breakdown by Credit Rating

Global AUM for Investment Grade (IG) fixed income ETFs has reached €1.8 trillion, with €370 billion in Europe. High Yield (HY) ETFs, offering higher-risk, higher-return opportunities, have garnered €130.4 billion globally and €31.6 billion in Europe. A further €213.1 billion globally and €30.7 billion in Europe is invested in ETFs with a diversified approach across multiple credit ratings.

In the first three quarters of 2024, Investment Grade (IG) fixed income ETFs attracted €204.5 billion in global net inflows, with European flows totaling €35.6 billion. This underscores investors' preference for higher-quality debt securities. High Yield (HY) ETFs, offering higher-risk, higher-return opportunities, saw global inflows of €17.6 billion and €3.3 billion in Europe. While ETFs encompassing multiple credit ratings amassed €42.9 billion globally, they faced a slight net outflow of €108 million in Europe, indicating regional variations in investment strategies.

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Breakdown by Maturity

Short-term fixed income ETFs lead with €268.9 billion globally and €51.5 billion in Europe, showing a preference for shorter-duration bonds. Long-term ETFs hold €172 billion globally and €14.3 billion in Europe, while intermediate-term ETFs have €102 billion globally and €21.8 billion in Europe. Investors clearly favor short-term bonds over longer options.

Three quarters in, long-term bond ETFs led global inflows with €39.1 billion, while in Europe, short-term bond ETFs saw the highest interest, attracting €4.9 billion.

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Active vs. Passive

Active management in fixed income ETFs has surged globally, rising from 4% in 2014 to 13% in 2024, driven largely by the American market's embrace of active strategies. In contrast, Europe remains steady with a 3% active share, highlighting the region's continued preference for passive management.

Global flows into fixed income ETFs show a clear shift toward active management in recent years. While passive strategies have consistently attracted strong inflows, peaking at €238.8 billion in 2023, active ETFs have seen a dramatic rise. In 2024, active inflows reached €78.5 billion, more than tripling since 2019, reflecting a growing appetite for more dynamic, managed exposure amidst changing market conditions.

In Europe, passive fixed income ETFs continue to dominate, consistently capturing the majority of inflows. In 2024, passive ETFs attracted €44.5 billion, while active ETFs, despite remaining a smaller segment, saw an increase to €2.35 billion in inflows—highlighting a modest but growing interest in actively managed strategies amidst Europe's predominantly passive landscape.

Top Fixed Income ETF Issuers

Global

A handful of major players dominate the €2.2 trillion Fixed Income ETF market. iShares, the leading player, manages €922.6 billion across 590 ETFs, constituting 42% of the market and 23% of all fixed income products. Vanguard follows closely with €475.9 billion and 87 ETFs, capturing 22% of the market share. Together with SPDR, Amundi, Invesco, and Xtrackers by DWS, these firms control 75% of market assets and 46% of all fixed income ETFs. This concentration highlights their significant influence on global fixed income trends.

Europe

A select few giants dominate the €450 billion European Fixed Income ETF market. iShares, the undisputed leader, commands a 56% market share with €249.8 billion in assets under management. Amundi and Xtrackers follow closely, holding €52.5 billion and €44.4 billion, respectively. Together with SPDR, Vanguard, UBS, and BNP Paribas Easy, these firms control a staggering 88% of the market, shaping the future of European fixed income investing.

Top Fixed Income ETF Index Providers

Bloomberg holds the top spot among Fixed Income ETF index providers, with its indices tracking 580 ETFs and over €215 billion in assets. S&P Dow Jones and ICE follow, with indices linked to €69.2 billion and €61.9 billion, respectively.

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Download the Fixed Income ETFs Report Q3 2024

Discover more insights and data on the fixed income ETF markets, including top and worst performers, funds with the most net inflows and outflows, and the latest launches by downloading the free report here.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.