CHART OF THE DAY: Investors keep buying bond funds amid one of the worst crashes in market history

• The bond market is experiencing one of its worst declines on record after interest rates surged.
• The iShares 20+ year US Treasury ETF has seen its worst sell-off ever, falling as much as 47%.
• But investors are still buying billions of dollars of bonds funds despite the ongoing pain.

Our Chart of the Day is from Bank of America, which highlights the painful decline experienced in the bond market over the past few years.

The iShares 20+ Year Treasury Bond ETF has plunged as much as 47% from its 2020 peak, making the collapse worse than the 1981 bond bear market and on par with some of the worst market crashes in history.

A combination of elevated inflation, a resilient economy, and fast rising interest rates have sent bond yields surging and bond prices plunging, with the losses having accelerated after the Federal Reserve began hiking rates in March 2022.

"It's the greatest bond bear market in history as stubborn prices and a resilient economy have propelled yields sharply higher," Bank of America said in a Wednesday note.

But despite the pain, investors are pouring billions of dollars into bond funds, with high bond yields luring in a fresh wave of buyers.

Long-term bond ETFs have collected $500 billion in inflows from investors since 2019, while cash and short-term bond ETFs have attracted $191 billion in assets, according to Bank of America.

Meanwhile, the iShares 20+ Year Treasury Bond ETF has nearly doubled its assets under management to $37.6 billion from $19.6 billion at the start of 2022, according to data from YCharts.

For the rout in the bond market to end — and for all of these bond fund buyers to make money — interest rates need to fall.

Whether that happens because inflation has reached the Federal Reserve's target and they stop hiking rates, or because the economy eventually enters a rocky period and the Fed cuts interest rates, all that matters for today's bond fund buyers is that rates stop moving higher, and instead start to move lower.

"The 'diversified' US aggregate bond index is just a bet on lower yields and lower inflation," Bank of America said.