November 18, 2025 - U.S. households’ direct holdings of individual bonds surged to 51% of retail fixed-income investments in Q2 2025- the highest level since Q1 2013- driven by rising interest rates and advances in bond-trading technology.
“The renewed appetite for direct bond ownership shows that when yields become meaningful, many retail investors prefer the certainty and predictable cash flows of holding bonds to maturity,” said Kevin McPartland, Head of Research in Market Structure & Technology at Crisil Coalition Greenwich and author of The battle for retail fixed-income investors.
Much of the inflow into directly held bonds following the U.S. Federal Reserve’s 2022 rate hikes went into U.S. Treasuries, which now represent roughly one-quarter of U.S. household fixed-income assets- a share not seen since 1985 during the “Volcker Shock.”
The federal funds rate reaching 5% made holding bonds to maturity especially attractive, offering high yields without the short-term price volatility that can affect exchange-traded funds (ETFs) and mutual funds. By contrast, directly held corporate bonds did not see the same shift, in part because liquid credit ETFs remain an easier route for many retail investors.
“ETFs will likely remain the primary vehicle for most retail fixed-income needs because of their diversification and accessibility,” Kevin McPartland added. “At the same time, the clarity, tax advantages and tailored cash-flow solutions offered by directly held bonds and separately managed accounts (SMAs) mean they will continue to play an important role for U.S. investors.”
Technological innovations have been central to these shifting dynamics: Electronic trading, improved retail broker bond screens, real-time pricing, and increased automation in portfolio construction and tax management have enabled wealth managers to shrink SMA minimums from $2 million or more to near $100,000, broadening access.
SMA assets have grown nearly 70% since 2019, accounting for over 14% of retail fixed-income investments at the end of 2024. SMAs held roughly half of retail corporate and municipal bond assets in 2024- underscoring how technology is reshaping distribution and product choice even as fixed-income ETFs retain broad appeal.
The battle for retail fixed-income investors is based on an analysis of Federal Reserve and Bloomberg data covering household fixed-income holdings from 1945 through Q2 2025. Crisil Coalition Greenwich also conducted interviews in Q3 2025 with institutional bond-market participants in the U.S. to contextualize trends and investor behavior.