Bond ETF Flows Signal a Duration Barbell

Rates in focus:

With rates back in focus, fixed income ETF flows are revealing where investors are placing their duration bets. The Fed’s new leadership appears focused on inflation that remains persistently above their 2% target, as chair Kevin Warsh has promised a policy “regime change” centered on price stability. While the Fed remained on hold in July, markets are currently pricing in a hike by year-end. While acknowledging this as a possibility, Dr. Kelly maintains his base case that the Fed will stay on hold, and believes that we are unlikely to see a prolonged hiking cycle. 

Investors have used a duration barbell:

ETF investors have leaned hard into the front and middle of the curve this year. Ultrashort bond ETFs have taken in $83Bn, while intermediate duration has also been a clear winner: Intermediate-Term Bond ($52Bn) plus Intermediate-Term Core-Plus Bond ($34Bn) totals roughly $86Bn in the same part of the curve. JPMorgan Active Core Bond ETF (JBND) leads all active fixed income ETFs in the intermediate-term category in flows this year, while JPMorgan Core Plus Bond ETF (JCPB) leads all intermediate core-plus funds. Short-term bond ETFs have added another $23Bn in flows this year. Long-term bond flows have picked up recently but still trail with just $2Bn, a gap that underscores hesitancy to lock in duration.¹

That imbalance in flows reflects today’s macro trade-offs: sticky inflation can keep real yields higher for longer, while growing federal debt and heavy Treasury issuance can lift term premium and long-end volatility. In response, flows have favored a barbell since late 2024, when the Fed began cutting, by pairing ultrashort for income with intermediate duration for diversification and potential upside if growth slows, without taking the full sensitivity of long bonds.

Active management can provide all-weather solutions:

With rates moving up on the long end due to uncertainty surrounding inflation, active managers that can leverage the full fixed income opportunity set to better position portfolios and potentially provide outperformance is crucial. Active fixed income ETFs have surpassed $600Bn in AUM, accounting for 37% of all fixed income flows in the U.S. this year.¹

Within the active space, we have our flagship fixed income ETF, JCPB. The fund serves as a core fixed income foundation with an expanded opportunity set below investment grade, offering “core like risk” with “plus like returns”.

Our recently converted preferreds fund, JPMorgan Preferred and Income Securities ETF (JPRF), is also a strategy that can provide monthly tax-efficient income to investors. JPRF primarily invests across preferreds, contingent convertibles and corporate hybrids with at least 25% exposure to the financials sector.

The funds:

JCPB:

• At $14Bn+ in AUM, JCPB ranks in the top 10 of all active fixed income ETFs and in the top 5 for YTD active fixed income ETF flows ($5Bn+ YTD).¹
• Outperformed the Bloomberg U.S. Aggregate Index in 100% of rolling 3-year periods since inception (1/28/2019).²
• Consistency reflects JCPB’s flexible toolkit, with the PM team adjusting levers across market environments. Today, JCPB remains focused on yield and carry — emphasizing diversified securitized allocations and selective corporate credit opportunities — while maintaining a modest duration overweight as a hedge against risk-asset exposure.

JPRF:

• Extended sector solution providing “high yield-like” yield with better tax efficiency and an investment-grade rated portfolio.
• Converted from a Mutual to an ETF (July 10th); mapping over $2Bn+ AUM and four-year track record.
• Regulated industries comprise the majority of the JPRF investment universe. The strategy is overweight bank capital expressed primarily through the $1,000 par and contingent convertible segments of the market – emphasizing high quality security structures.

¹ Bloomberg, J.P. Morgan Asset Management as of August 14, 2026.

² Bloomberg as of July 31,2026.