What’s going on here?
Bond ETF launches in the US have surged by 50% in 2024, with nearly 120 new funds introduced by September compared to 79 in the same period last year.
What does this mean?
As investors anticipate interest rate cuts from the Federal Reserve, the demand for bond ETFs has skyrocketed. The Fed recently slashed rates by 50 basis points and projects an additional 150 basis points in reductions by the end of 2025. This has driven bond ETF launches to represent 46% of all ETF debuts this month, far above the 20% average for the year. The benchmark 10-year Treasury yield, currently around 3.75%, has declined from over 5% last October, making bonds more attractive as falling rates boost bond prices.
Why should I care?
For markets: Investors chase higher yields.
Average monthly net inflows into US bond ETFs have hit a record $25 billion in 2024, up from $17.1 billion in 2023. By September 20, inflows had already reached $22.9…
