A MONTH AFTER LIBERATION

A Month After Liberation

To find out more about EUR IG Corp ETFs, contact your iShares representative. While market volatility has subsided since Trump’s “Liberation Day” tariffs triggered a broad market selloff in early April, trade tensions have continued to drive market movements. Amidst the volatility in US Treasuries and recent weakening of the US dollar, this month, we explore how international exposures such as EUR bonds can play a bigger role in investor portfolios.

Time to look at EUR bonds?

Investors may look towards international exposures, particularly EUR credit assets as a source of high quality returns, with the European Central Bank having more room to ease relative to the Fed amid easing inflationary pressures, alongside Germany’s announcement of a fiscal package in March potentially being supportive for growth. Momentum into EUR credit assets have picked up pace, with EUR investment grade funds having seen USD ~5.5B inflows year to date.¹

The value of adding EUR bonds to a fixed income portfolio has been notable in historically volatile periods for bonds, including the tariff volatility this year (Figure 1). Owing to different drivers of returns including EUR rates and currency exposure, EUR bonds have been able to offer a degree of portfolio ballast to a US bond exposure.

Bond ETFs prove their mettle (again)

As we’ve seen before during other periods of market stress, bond ETFs once more proved resilient in April, performing as expected while serving as an important source of liquidity and price discovery for the underlying market. Throughout the volatile market environment, investors continued to turn bond ETFs to navigate uncertainty, with both US and Europe seeing among the most active trading sessions of all time last month.

Notably, iShares bond ETFs trading volumes were higher compared to the industry. At the peak of April volatility, iShares bond ETFs comprised 9 of the 10 most traded ETFs in the UCITS space. Zoning in on EUR corporate exposures, the iShares flagship IG product traded 1.6x its 3-month average daily volume, nearly 30% of the total trading volume of ETFs in the asset class (Figure 3). iShares bond ETFs have again proven to be the industry’s most liquid and heavily traded, especially when they are needed most.

Innovation Meets Opportunity

How years of constant fixed income ETF innovation are empowering investors to navigate today’s markets and build portfolios for the new era.

Last year, our whitepaper “No Time to Yield” discussed why investors may want to consider getting cash off the sidelines and employing bond ETFs in the new market regime.

In our latest paper “Innovation Meets Opportunity”, we highlight how accelerating bond ETF innovation has equipped investors with a robust ETF toolkit that simply did not exist the last time yields were at these levels, and how investors can use bond ETFs to navigate both today’s and tomorrow’s market environments.

Did you know?

1. Client demand for fixed income ETFs is driving significant asset growth with record flows in 2024 and on track to reach US$6 trillion in assets under management (AUM) by 2030, if not sooner. Globally, bond ETFs experienced the highest organic asset growth (20%) of any other asset class or investment vehicle last year. And so far in 2025, client adoption continues to accelerate, with assets up 22% on an annualized basis.
2. The flywheel of bond ETF innovation is powering this growth, helping more investors to access exposures and outcomes that were previously difficult to access. Last year a record 420 bond ETFs were launched, enabling investors to tailor their fixed income investments in ways previously unthinkable.
3. The ever-increasing toolkit allows investors to take advantage of a generational opportunity in fixed income. Yields are higher than they have been in 20 years. Globally, some 80% of fixed income assets now yield over 4% and we believe they’ll remain elevated for the foreseeable future.
4. iShares has been spearheading innovation in bond ETFs for over two decades. Our diverse and evolving product set supports clients globally to navigate across market environments, with more modern, precise ways to reach nearly every part of the fixed income market. As the experts in portfolio construction with a strong heritage in risk management, we understand the tools and exposures that investors require to thrive in a changing world.

¹ Source: BlackRock, “Innovation meets opportunity”, as of April 2025.
Diversification may not fully protect you from market risk. There is no guarantee that any forecasts made will come to pass.