Whether it's in response to the nonstop efforts to impeach President Trump, the record-level stock market valuations or any of several geopolitical concerns, a growing risk-off mood among investors is sending money flooding into fixed-income funds.
Through mid-November, bond ETFs have already seen nearly $130 billion worth of net inflows, which surpasses the full-year record of $125 billion set two years ago.
That compares to $109 billion of net inflows for equity ETFs so far this year.
The last time bond ETFs finished a year with higher inflows than equity ETFs was 2009, in the immediate wake of the financial crisis.
"It's amazing that bond flows are so high when yields are so low, but this has been an incredibly hated bull market for stocks," said Salim Boutagy, financial adviser at Congress Wealth Management.
Mr. Boutagy doesn't subscribe to the general theory that a steady wave of retirees is driving the flow of assets into more conservative fixed-income strategies.
"I think people don't trust this bull market and they're plowing money into bonds at any hint of market volatility," he said.
Even without a lot of stock market volatility to be found lately, the surprising 21% gain by the S&P 500 Index so far this year has some advisers empathizing with an increasingly nervous investor base.
"Given year-to-date performance in domestic equities, people are starting to modify their portfolios to be positioned more conservatively," said Vance Barse, wealth strategist and founder of Your Dedicated Fiduciary.
In addition to the fears related to stock market risk, Mr. Barse cited a handful of other factors driving investors toward bond ETFs, including lower fees and the rising popularity of indexed strategies.
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Todd Rosenbluth, director of mutual fund and ETF research at CFRA, also cited the frothy stock market and an increased focus on fees as factors but pointed out that money is still flowing into bond mutual funds, which are generally more expensive than exchange-traded funds.
According to the Investment Company Institute, bond mutual funds had positive inflows during each of the first 10 months this year and are positive so far for November. That compares to equity mutual funds, which haven't seen a month of positive flows since January.
"There's a concern that the party will end quickly, and investors want to protect their downside," Mr. Rosenbluth said.
The fact that bond ETFs, which represent about 20% of all ETF assets, are taking in more than half of all ETF assets this year has been "the surprise story of 2019," Mr. Rosenbluth said.
"It's been 10 years since we've seen more money go into bond ETFs than equity ETFs, and the fact that we're seeing it in an upmarket is a sign these products are serving as more of a core part of investor portfolios," he added. "Investors are spooked, but this is not just a fear trade; it's a focus on lower-cost alternatives to mutual funds."
Dennis Nolte, vice president of Seacoast Investment Services, is still writing it the general trend toward bonds to rising fears of a recession coupled with some portfolio rebalancing.
"For the traditional 60/40 portfolio mix, it might be a rebalancing effect where stocks have far outperformed bonds," Mr. Nolte said. "The greater effect might be that folks think a recession is coming."