Investing Insights Bond ETFs Are Surging in Popularity in 2025. Here Are 5 of the Best
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Nov 14, 2025 Dan Sotiroff, a senior manager research analyst at Morningstar Research Services and editor of the Morningstar ETFInvestor newsletter, dives into the booming world of bond ETFs in 2025. He explains why investors are flocking to these funds and compares the flows between passive and actively managed options. Sotiroff outlines four major types of bond ETFs and emphasizes the stability that core ETFs bring to portfolios. He highlights top picks like Vanguard's BND and Fidelity's Total Bond ETF, also discussing the trade-offs and risks associated with higher-yield bond ETFs.
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ETFs Dominate 2025 Bond Flows
- ETFs are becoming the vehicle of choice across investor types, driving huge flows into bond ETFs in 2025.
- About a third of ETF inflows year-to-date have gone into bond ETFs, showing a major shift into fixed income.
Higher Rates And Product Gaps Drive Supply
- Higher interest rates make bonds attractive again compared with the prior decade of near-zero rates.
- Managers are launching more fixed-income ETFs as stock ETF space gets saturated and price-competitive.
Passive Bond ETFs Lead Flows
- Passive bond ETFs currently capture slightly more flows than active, roughly a 60/40 split in favor of passive.
- Large, established passive funds (e.g., BND, AGG) anchor flows because investors use them as core holdings.