“Having an actively-traded product ultimately gives people more confidence in it,” he said. “If people are confident and they believe they can use it for both portfolio construction and risk management, then that will lead to more assets under management.” BlackRock is the world’s largest ETF issuer, with 39% of the U.S. market.

BlackRock also studied the electronification of the bond market and the growth of bond index derivatives for its report. Here are some of the other key takeaways:

• While average daily turnover of U.S. high-yield corporate bonds has risen since 2012, activity in U.S. investment-grade credit has stagnated at about 0.4% of the total outstanding market.
• Market breadth has improved in both areas, with trading diversified across a wider number of bonds.
• The increase in ETF creations and redemptions has coincided with revived turnover in underlying markets, benefiting corporate bond liquidity and price discovery.
• Ongoing growth in index derivatives -- mostly the credit default swap indexes (CDX), total return swaps and options -- has improved liquidity across all products, particularly in credit.
• The options markets on certain fixed income ETFs have been growing even more rapidly than the ETFs themselves.
• For BlackRock’s high-yield ETF, known as HYG, its listed options market has climbed to $34 billion in notional outstanding, the firm said; it oversees about $19 billion of assets, data compiled by Bloomberg show.

This article was provided by Bloomberg News.

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