U.S. bond ETFs inflows hit $207 billion in 2021 – CFRA report

U.S.-listed exchange-traded bond funds took in $207 billion last year — narrowly eclipsing the category's net inflows record set in 2020 — and Vanguard Group proved the biggest money magnet, according to data released publicly Tuesday by independent research firm CFRA Research.

Vanguard bond ETFs netted $84 billion in 2021, exceeding the net inflows of its larger rival BlackRock, whose bond ETFs took in $58 billion last year, CFRA's data showed. BlackRock ranked as the biggest provider of U.S.-listed bond ETFs at $521 billion in assets under management, followed by Vanguard at $370 billion, according to a CFRA report about the data.

Last year saw investors gain more comfort in using bond ETFs as a replacement for mutual funds or individual bonds to obtain diversification benefits, said Todd Rosenbluth, head of ETF and mutual fund research at CFRA, in an interview. From an inflows perspective, that shift helped give an edge to Vanguard over BlackRock due to the makeup of their respective product lineups, Mr. Rosenbluth said.

"Vanguard benefited from having a suite of products that's mostly focused on the core of investor portfolios and less exposed to the more tactical corporate bond and short Treasury products," he said.

Investors rotated away from some of BlackRock's iShares products, "whereas Vanguard doesn't have either the same products or they don't have products that are as sizable to see the outflows," Mr. Rosenbluth said.

For BlackRock, the success of its iShares Core U.S. Aggregate Bond ETF, iShares TIPS Bond ETF and other offerings were partially offset by net outflows from iShares iBoxx $ Investment Grade Corporate Bond ETF and iShares Short Treasury Bond ETF, CFRA's report said. The aggregate bond ETF and TIPS ETF were among three BlackRock funds that ranked among the top-10 U.S.-listed bond ETFs for net inflows in 2021, according to CFRA's report.

Vanguard had five ETFs among the top 10 bond ETFs for highest net inflows, CFRA's report showed. Vanguard Total Bond Market ETF ranked No.1 with $19 billion of net inflows in 2021. Those in the top 10 for inflow accounted for a total of $106 billion of new money, or more than half of the category's overall 2021 cash haul, the report said.

The $207 billion of net inflows into bond ETFs during 2021 was just ahead of the previous record of $206 billion set in 2020, according to the CFRA data

"While we're gratified that investors entrusted their assets to Vanguard ETFs in record numbers in 2021, this is simply an affirmation of the value we deliver to our clients and the trust they place in us," a Vanguard spokesman said in an email Tuesday. "We remain focused on helping investors achieve their financial goals, like preparing for retirement or saving for their children's education."

Armando Senra, a managing director and head of iShares Americas at BlackRock, said: "ETFs are transforming and modernizing the bond markets by increasing transparency, improving liquidity and lowering trading costs. Today, market participants are using fixed-income ETFs for price discovery, portfolio construction and risk management. We are excited about the future of fixed income ETFs, not just in terms of growth, but in their ability to deliver better outcomes for all types of investors."