Bond ETF flows surge in hunt for yield: 'Market sniffing out something here,' says BlackRock exec

Amid recent bouts of stock volatility and a new Fed chair coming into a complex inflation environment, the action in bond ETFs is sending an important signal to the market. "Flows tell the story," Steve Laipply, global co-head of iShares fixed-income ETFs at BlackRock, told CNBC's Dominic Chu this week. And that is a story of rising investor interest in yield across the fixed-income market. "In the U.S., bond ETF flows are up a shocking 60% relative to last year," Laipply said. Laipply said a significant share of the flows are going into U.S. treasuries, but there also has been a significant move by investors into multi-sector income ETFs. "The income story is very robust and enduring, because rates will continue to move around and 'real yields' are definitely an opportunity," he said, a reference to bond yields net the rate of inflation. "Real yields reflect a growth story," he said, led by the AI boom and the anticipated increase in productivity that is tied to it. Investor interest in multi-sector income funds, according to Laipply, is also an indication of greater emphasis on "income per unit of duration." "The idea of getting a little more duration, but really still focusing on income ... that's sort of the sweet spot," he said. "As a bond investor, real yield is your very good friend," George Bory, chief investment strategist of fixed income at Allspring Global Investments, told Chu. …