It’s been another strong year for ETF demand. ETFs gathered approximately $350 billion of new money year-to-date through April 16. A healthy 31% of the flow has gone to fixed income ETFs. Investors have many products to consider if they want to take on credit risk or interest risk. However, thus far they have mostly wanted to hide out in low-risk fixed income ETFs.
We previously wrote about the demand for fixed income ETFs, particularly short-term Treasury ETFs, in the first quarter of 2025. However, it has continued in April. During the recent tariff turmoil, the safest fixed income products have been in vogue.
Getting Shorter Has Benefits
The SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) pulled in $7.8 billion in the first weeks of April. This pushed its full year net inflows to $13 billion. Meanwhile, the iShares 0-3 Month Treasury Bond ETF (SGOV) added $4.0 billion to start the quarter. This has extended its fixed income industrywide lead to $14 billion. With a 0.09% fee, the $43 billion SGOV has the lower net expense ratio of the pair. However, BIL remains the larger fund, with $49 billion.
In April, we have also seen strong demand for other ultra-short Treasury ETFs as investors seek safety. For example, the Vanguard 0-3 Month Treasury Bill ETF (VBIL) added $378 million to its coffers. The fund launched in February 2025 and is already approaching $1 billion in AUM. As of April 16, it has $928 million. VBIL’s fee of 0.07% is lower than the iShares and State Street Advisor peers.
Removing Risk Via ETFs
Meanwhile, investors pulled away from some of the higher risk fixed income ETFs. The iShares 20+ Year Treasury Bond ETF (TLT) had $2.7 billion of net outflows in the first weeks of the month. While many expect the Fed to cut rates in 2025, investors saw less appeal in taking on the interest rate risk. TLT’s average duration of 16 years is significantly higher than many fixed income ETFs.
Investors also rethought taking on credit risk in the first half of April. The Invesco Senior Loan ETF (BKLN) and the SPDR Bloomberg High Yield Bond ETF (JNK) had net outflows of $1.9 billion and $1.8 billion, respectively. BKLN is less-rate sensitive than JNK, but both fell out of favor.
