Bond ETFs are seeing major inflows as of late because they have liquidity advantages over their underlying bonds and they have tax benefits. However according to Todd Rosenbluth, research head at VettaFi, in a conversation with MarketWatch, Vanguards Total Bond Market ETF, BND, is standing out from the crowd. One of the main advantages that BND has is investors transitioning from mutual funds into ETFs. Additionally, investors are capitalizing on tax-loss harvesting in the bond market which has taken a hit in H1 2022, both of these have been wins for BND. Vanguard users can also easily transition from mutual funds to ETFs. Moreover, investors are looking for safer storage of money, and shorter-duration treasuries and bonds are a good place to do that.

Finsum: The liquidity mismatch in the bond market is a huge advantage for ETFs and investors should heavily consider this.