Duration Divide: Long Bonds Sink as Convertibles and Cash Lead Taxable ETFs

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Weekly Channel Summary

The Taxable ETF channel closed the week with $2,365.71B in AUM spread across 727 funds from 150 issuers. Net flows were positive at $8,333M for the week, pushing YTD net inflows to $417,375M and 1-Year net inflows to $537,057M. The scale of trailing demand underscores continued investor allocation to fixed income exposures across credit and duration segments despite a mixed weekly performance backdrop.

This Week’s Performance Leaders and Laggards

On a WTD market-price basis, Taxable – Convertible led all categories at 0.57%, extending a strong YTD gain of 16.47%, while Government Ultrashort (0.07%) and Ultrashort (0.02%) categories held modestly positive amid broader rate-sensitive weakness. The weakest performers were Taxable – Long-Term (-2.15%) and Taxable – Government Long (-1.84%), both also deeply negative on a YTD basis at -4.92% and -5.43% respectively, reflecting pressure on long-duration Treasury exposures. FCVT topped individual fund performance at 1.13% for the week, while long-duration Treasury strips such as GOVZ (-3.80%) and EDV (-3.79%) anchored the bottom of the list. The spread between convertible and long-duration Treasury performance highlights a clear rotation away from rate-sensitive duration risk during the week.

Category Performance Snapshot

Category WTD 1 Month 3 Month 6 Month YTD 1 Year
Taxable – Convertible 0.57% -1.32% -5.02% 10.18% 16.47% 16.72%
Taxable – Government Ultrashort 0.07% 0.31% 0.93% 1.85% 2.66% 3.76%
Taxable – Ultrashort 0.02% 0.17% 0.88% 2.05% 2.77% 4.09%
Municipal – Single State 0.02% -0.08% 0.60% — — —
Taxable – Government Short -0.03% -0.77% -0.16% 0.38% 0.44% 1.70%
Taxable – Bank Loans -0.04% 0.46% 2.24% 3.84% 2.91% 4.68%
Taxable – International USD -0.23% -1.65% -2.30% -0.71% -0.74% -0.16%
Taxable – Short-Term -0.28% -1.25% -0.80% 0.11% 0.09% 1.49%
Taxable – Inflation Protected -0.40% -2.01% -1.69% -0.73% -0.31% -0.06%
Taxable – Government Intermediate -0.54% -2.44% -2.65% -2.24% -2.41% -1.28%
Taxable – Multisector -0.67% -1.98% -1.60% 0.42% -0.00% 1.56%
Taxable – Emerging -0.83% -2.84% -0.20% 2.70% 0.92% 4.29%
Taxable – Core -0.83% -2.58% -3.13% -2.06% -2.19% -1.02%
Taxable – High Yield -0.86% -1.92% -0.95% 1.37% 0.82% 2.39%
Taxable – International -0.87% -3.16% -1.05% -1.24% -2.52% -1.84%
Taxable – Core Enhanced -0.89% -2.66% -3.13% -1.87% -2.01% -0.77%
Taxable – Preferred Stock -0.90% -2.27% -1.42% -0.08% -0.53% -0.39%
Taxable – Securitized -0.99% -3.12% -3.48% -2.30% -2.13% -0.46%
Taxable – Corporate -1.08% -2.80% -3.60% -2.05% -2.63% -1.41%
Taxable – Emerging USD -1.27% -2.88% -3.21% 0.22% -0.76% 1.82%
Taxable – Government Long -1.84% -4.22% -6.69% -5.46% -5.43% -5.33%
Taxable – Long-Term -2.15% -3.91% -6.86% -4.24% -4.92% -4.84%

Top & Bottom 5 ETFs by Weekly Performance

Convertible-focused funds dominated the top of the weekly performance list, with FCVT (1.13%), TFFI (0.97%), and MCVT (0.71%) all posting gains as credit-sensitive instruments outperformed. On the downside, long-duration Treasury vehicles including GOVZ, EDV, and DWWN each declined more than 3.7% for the week. This divergence reflects the broader category split, where convertibles carry YTD returns near 16% while long Treasury exposures remain down mid-single digits to low double digits YTD. The performance gap between these two ends of the spectrum was the most pronounced feature of the week.

Ticker Fund Name WTD Performance
Top Performers
FCVT First Trust SSI Strategic Convertible Securities ETF 1.13%
TFFI Chesapeake Trend-Following Fixed Income ETF 0.97%
MCVT Miller Convertible Total Return ETF 0.71%
CWB State Street SPDR Bloomberg Convertible Securities ETF 0.57%
ICVT iShares Convertible Bond ETF 0.56%
Bottom Performers
GOVZ iShares 25+ Year Treasury STRIPS Bond ETF -3.80%
EDV Vanguard Extended Duration Treasury ETF -3.79%
DWWN Principal Long Duration ETF -3.70%
ZROZ PIMCO 25+ Year Zero Coupon US Treasury Index Exchange-Traded Fund -3.68%
XTWY BondBloxx Bloomberg Twenty Year Target Duration US Treasury ETF -2.92%

Analyzing the Weekly Flows

The channel gathered $8,333M in net inflows for the week, led by the Multi-Sector segment at $7,741M and Government funds at $2,140M, both benefiting from continued demand across credit and rate categories. Duration: Intermediate ($5,413M) and Duration: Ultrashort ($3,121M) attracted the largest inflows by duration bucket, while Duration: Long saw the week’s largest outflow at -$2,108M. By credit type, Credit: Blend led with $5,144M and Credit: Investment Grade added $2,672M, while Securitized (-$1,823M) and Corporate (-$542M) segments posted the largest weekly redemptions. This pattern suggests investors favored blended credit and shorter-duration exposures over long-duration and securitized products during the week.

Flows by Segment

Segment Fund Count AUM 5 Day 30 Day 90 Day YTD 1 Year
Multi-Sector 306 $995.61B $7,741M $24,313M $69,738M $191,935M $258,179M
Government 133 $746.97B $2,140M $19,335M $52,237M $151,472M $185,649M
Bank Loans 50 $75.67B $815M $3,504M $8,550M $17,913M $17,998M
Cat Bonds 1 $109M $2M $15M $31M $73M $96M
Preferred Stock 31 $41.93B -$0M -$108M $1,359M $2,827M $3,591M
Corporate 158 $399.43B -$542M -$4,538M $8,686M $44,510M $62,369M
Securitized 47 $105.31B -$1,823M -$164M $1,837M $8,645M $9,175M

Flows by Credit Type

Credit Type Fund Count AUM 5 Day 30 Day 90 Day YTD 1 Year
Credit: Blend 196 $283.57B $5,144M $11,516M $27,921M $74,323M $100,858M
Credit: Investment Grade 372 $1,887.60B $2,672M $31,221M $108,981M $329,860M $413,808M
Credit: High Yield 154 $193.40B $502M -$442M $5,377M $12,901M $22,018M
Specialty: Interest Rate Volatility 1 $114M $0M $21M $49M $94M $94M

Flows by Duration

Duration Fund Count AUM 5 Day 30 Day 90 Day YTD 1 Year
Duration: Intermediate 419 $1,323.33B $5,413M $7,258M $57,460M $203,544M $284,531M
Duration: Ultrashort 149 $530.19B $3,121M $20,831M $49,677M $146,900M $160,863M
Duration: Short 92 $319.75B $1,891M $14,480M $25,881M $58,597M $73,115M
Physically Held 1 $0M $0M $0M $0M $0M $0M
Duration: Long 62 $191.42B -$2,108M -$253M $9,310M $8,136M $18,270M

Top & Bottom 5 ETFs by 5-Day Flow

IUSB led all funds with $4,191M in weekly inflows, followed by SGOV at $961M, as investors favored broad core bond and ultrashort cash-like exposures. On the outflow side, TLT shed $1,714M and MBB lost $1,455M, marking the two largest weekly redemptions in the channel. These outflows align with the broader weakness seen in long-duration Treasury and securitized categories over the period. The contrast between strong inflows into core aggregate and short-duration products versus outflows from long Treasury and MBS funds reinforces a defensive positioning theme this week.

Ticker Fund Name 5-Day Flow
Inflows
IUSB iShares Core Total USD Bond Market ETF $4,191M
SGOV iShares 0-3 Month Treasury Bond ETF $961M
GGOV iShares Global Government Bond USD Hedged Active ETF $826M
HYG iShares iBoxx $ High Yield Corporate Bond ETF $598M
BND Vanguard Total Bond Market ETF $497M
Outflows
TLT iShares 20+ Year Treasury Bond ETF -$1,714M
MBB iShares MBS ETF -$1,455M
VCLT Vanguard Long-Term Corporate Bond ETF -$566M
EMB iShares JP Morgan USD Emerging Markets Bond ETF -$475M
IQMM ProShares GENIUS Money Market ETF -$414M

Note: the following fund(s) were excluded from the flow totals above because the weekly flow exceeds 75% of the fund’s AUM and may be the result of a custom rebalance: MBBA ($544M).

Issuer League Table Update

iShares remains the dominant issuer in the Taxable channel with $847.89B in AUM (35.84% share), followed by Vanguard at $615.42B (26.01% share), together accounting for over 60% of channel assets. iShares also led weekly inflows at $3,480M, with Vanguard adding a further $1,340M, extending their combined grip on both assets and flows. On the outflow side, ProShares recorded the largest weekly redemptions among issuers at -$408M, followed by Simplify at -$280M. The concentration of inflows among the two largest issuers, alongside modest outflows spread across smaller providers, points to continued consolidation of investor demand toward scale players.

Top 5 Issuers by AUM

Brand Fund Count AUM AUM Market Share
iShares 87 $847.89B 35.84%
Vanguard 31 $615.42B 26.01%
SPDR 36 $175.32B 7.41%
JPMorgan 20 $99.84B 4.22%
Schwab 12 $79.66B 3.37%

Top & Bottom 3 Issuers by 5-Day Flow

Brand 5-Day Flow
Inflows
iShares $3,480M
Vanguard $1,340M
PIMCO $554M
Outflows
ProShares -$408M
Simplify -$280M
SP Funds -$212M

For a deeper dive into these trends, access our FREE, in-depth Taxable ETF reports in the right side panel of this page.

Disclosures

This material is for informational purposes only and should not be considered investment advice. All investments, including ETFs, involve risk, including the possible loss of principal. Investors should consider their investment objectives, risks, charges, and expenses carefully before investing.

This analysis was developed by the team at ETF Action. We leverage advanced AI tools to assist in the drafting and refinement of our content, based on our expert prompts, direction, and final review.