Inflation's Impact on Bond ETFs Worries Advisors

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Inflation is currently the No. 1 concern of financial advisors — even more so than geopolitics and the risk of a recession in the U.S. That's according to a new survey conducted by ETF Trends.

"They're not as concerned about volatility … in fact, numbers show they continue to buy on the dips. But inflation and rising interest rates is a real worry and the last time we saw this was the late '70s," explained Tom Lydon, CEO of ETF Trends.

Typically, rising inflation has a negative impact on bonds. The largest bond exchange-traded funds, including the Vanguard Total Bond Market Index Fund ETF (BND) and the Pimco Active Bonds ETF (BOND), recently hit new lows.

On Monday at the Exchange ETF Conference being held in Miami, Lydon told CNBC's "ETF Edge" that he expects bond ETF outflows to continue as advisors direct more of clients' money away from fixed income and into relatively safer or shorter-duration investments right now.

"Dividend-oriented strategies, commodities, other alternative income strategies like some of these options overlay strategies … you're seeing flows going to all these areas," Lydon said.

The conference is currently the largest in the world focusing on exchange-traded funds and CNBC's special coverage will continue all week.


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