- ETFs are receiving mutual fund assets
- If more players join the market could be even bigger than $6 trillion in 2020
- Firms need to think strategically about how to fill market needs in ETFs
Research from global analytics firm Cerulli Associates finds that exchange-traded fund (ETF) assets in the United States will grow to more than $6 trillion by 2020, and this number can potentially increase if more asset managers enter the space. Cerulli believes the slow erosion of mutual fund assets by exchange-traded products will prompt a growing number of asset managers to enter the ETF market.
"While many sponsor firms believe the ETF market will continue to grow organically, growth will largely be a result of more investors using the low-cost vehicle," explains Jennifer Muzerall, senior analyst at Cerulli. "As new investor segments continue to acclimate to ETFs in their portfolios and sponsors develop new products, ETF assets are expected to climb as the industry enters its second decade."
Cerulli's report, Exchange-Traded Fund Markets 2015: Opportunities in the Face of Changing Dynamics, analyzes asset managers that manufacture and distribute ETFs in the U.S. The report focuses on the distribution and trends in the ETF market, including active ETFs and strategic beta ETFs, institutional distribution, marketing, and staffing.
"With more asset managers developing an ETF strategy, product proliferation will continue to increase, and firms will need to think strategically about the types of products they develop, attempting to fill any white space that remains untouched," Muzerall explains. "As investor sentiment is evolving toward solutions-oriented outcomes, sponsors need to think of ETFs no longer solely as a product, but as a tool for investors to achieve their investment objectives."