This year, the word on bonds is "buy."
Investors have flocked to bond-based exchange-traded funds in droves since the end of 2018, according to Morningstar, with the popular iShares 20+ Year Treasury Bond ETF, ticker TLT, seeing $4.8 billion in net new money year to date.
Compounding this, taxable corporate and government bonds saw an 11.5% increase in flows in the first half of 2019, with municipal bonds not far behind at a 9% gain. U.S. equity ETFs lagged these gains dramatically, seeing inflows rise just 3%.
"We're seeing a flight to quality," CFRA's Todd Rosenbluth said Friday on CNBC's "ETF Edge." "So, investors have pushed down yields, and as a result, they're using ETFs to be able to take on additional risk."
But the inflow drop-off in U.S. stock-based funds doesn't mean the ETF frenzy is over, or that we're at "peak ETF," said Rosenbluth, who is CFRA's senior director of ETF and mutual fund research.
"We think we're going to see further adoption," he said, noting that some broad-based stock ETFs including iShares' Core S&P 500 ETF, ticker IVV, and Vanguard's S&P 500 ETF, ticker VOO, have actually seen notable gains.
Ben Johnson, director of global ETF research at Morningstar, agreed that his firm's data wasn't spelling doom for the ETF industry.
"Investors' risk appetites have certainly improved relative to where they stood in the back half of last year, and you see that in the way that they've fanned out further on the yield curve," he said in the same "ETF Edge" interview. "If you look at where we're at in the equity markets, the fact that we are in the midst of what's been the best June in decades, well, ETFs in the equity space were sluggish out of the gate, certainly through the first five months of the year."
But that's not deterring investors just yet, even as the long-term Treasury-based TLT is still the top-ranking ETF on a year-to-date basis, Johnson said.
"What we've seen thus far in June is a noticeable uptick into ETFs covering U.S. equities, notably a pair of big S&P-500-tracking ETFs in IVV and VOO," he said.
Stocks saw modest gains on Friday as Wall Street's best first half in 20 years came to a close. Bond yields also rose ahead of this weekend's G-20 summit, where many expect developments in the U.S.-China trade dispute as President Donald Trump meets with Chinese President Xi Jinping.