Bond funds are having a banner year.
Fixed-income-based exchange-traded funds are on pace for a record year, accruing $130 billion in inflows as of Nov. 14, according to ETF.com. If the year ended there, that would be the largest-ever annual haul for fixed-income ETFs, the research website says.
Dave Nadig, managing director of ETF.com and a longtime thought leader in the ETF industry, said the gains are "really across the board."
But one area in particular is seeing outsized gains, Nadig said Monday on CNBC's "ETF Edge."
"The big winners here on inflows have been international bonds, which I think has surprised people," he said. "BNDX from Vanguard is their global bond portfolio. There was no global bond ETF just a few years ago. That's pulled in $10 billion just by itself this year."
Tim Seymour, founder and chief investment officer at Seymour Asset Management, believes that's where the next leg of the bond-market boom could be seen.
"If you have the ability to invest in more sophisticated fixed-income products outside of just [the] U.S. Treasury curve, I think that's where the ETF world is changing," he said in the same "ETF Edge" interview. "This is where ETFs are starting to find enormous growth opportunities."
With the exception of Europe, where Nadig said "no rational retail investor" would want to buy its negative-yielding debt, some global fixed-income plays still offer good growth potential, the two pros said.
"In the [emerging markets] space, I love Brazil because I actually think you have a currency tailwind from a central bank that's done a lot of fiscal adjusting," said Seymour, who also appears regularly as a trader on CNBC's "Fast Money."
"I think where emerging market central banks and Treasurys do very well is an environment where … the rest of the world is fighting to find some inflation," Seymour said. "Find the currencies that are the cheapest. Find the industrial backdrop. That, I think, makes the most sense."
Overall, the flight to bond funds tells Nadig that investors are seeking some protection.
"I see all of this as a safety rotation play. It matches nicely with the big flows we've seen into defensive equity plays like USMV from iShares and into gold," he said, also citing the inflows into iShares' 20+ Year Treasury Bond ETF, or TLT. "I see all of this as maybe the beginning of a bigger rotation into risk-off assets."
Seymour wasn't so sure, noting that if the macroeconomic environment can continue to stabilize, even riskier investments could bear fruit.
"If the Fed is basically holding serve and you have a dynamic where if we can get a trade deal done and you have the cyclicality, this does not mean runaway global PMIs, it doesn't mean that, necessarily, you get industrial production ratcheting up," he said. "You just need to stabilize. And for global markets and definitely emerging markets, the most money is usually made when things go from terrible to just bad, and I think that's really what this dynamic is."