A new report from Aite Group examines the exchange traded fund (ETF) industry, specifically fixed income ETFs and their position within the broader ETF landscape.
According to Aite Group, within the past few years the fixed income ETF has evolved into a viable investment instrument. These ETFs were a scarce breed on the fund landscape as recently as the mid-aughts, but have multiplied by about twenty fold since then, with assets under management increasing by a factor of three since 2007. While the outlook is positive for fixed income ETFs, which meet many goals of the investment community--including offering diversification across asset classes and serving broad investment strategies--obstacles exist. These include the need for relatively large amounts of capital to launch new fixed income ETFs and potential difficulty in developing fixed income strategies.
“Despite certain significant issues, the current low-interest-rate environment and need for income-producing investment strategies indicates that fixed income ETFs are here to stay,” says John Jay, senior analyst with Aite Group and co-author of this report. “Growth in fixed income ETFs is only just beginning. As they develop further, mutual fund firms will have to scramble just to maintain the status quo.”
Aite Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities & investments, and insurance, Aite Group’s analysts deliver comprehensive, actionable advice to key market participants in financial services. The firm is headquartered in Boston with a presence in Chicago, New York, San Francisco, London, and Milan.
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