BGI's fixed income ETFs see strong growth

NEW YORK, May 16 (Reuters) - Data from Barclays Global Investors indicates some investors are using fixed income exchange-traded funds for safety amid volatile markets and fallout from the subprime crisis.

BGI, which has more than half of the overall U.S. ETF market including equity products, has seen assets in its iShares fixed income ETFs grow by about $5 billion so far this year to reach $37 billion.

"Over the past year investors have been surprised by the type of risk they have been exposed to in other investments, so there is increased demand for better transparency," Matt Tucker, head of fixed income strategy at BGI, said in a telephone interview on Friday.

The BGI fixed income ETFs are all index products. Portfolio holdings are updated daily on the firm's Web site.

The iShares Lehman TIP Bond Fund TIP.P has attracted about $1.3 billion this year, and now totals $6.7 billion.

The iShares Lehman Aggregate Bond Fund AGG.P, considered a core fixed income holding, has attracted more than $1 billion and totals $8.7 billion.

The ishares iBoxx $ High Yield corporate bond Fund HYG.A has grown from about $300 million at the start of the year to more than $700 million.

"For investors who are not as concerned about a potential U.S. recession or who believe one is already priced in, a 9 percent yield presents an attractive alternative to other investments," Tucker said of the high yield ETF.

Fixed income ETFs are relatively new products compared to the more familiar equity ETFs. BGI rolled out its first fixed income ETFs in 2002.