One factor driving the industry’s growth is that ETFs have given investors low-cost, liquid exposure to more asset classes by “democratizing” markets to a greater degree, the paper argues.
The rapid rise in ETF assets has resulted in more competition between providers and a surge in new products. Additionally, more ETFs are closing due to lack of interest, suggesting the market is getting “close to saturation,” the analysts wrote.
However, the global business is benefiting from a renewed focus on investment costs, the rise of the fee-based advisor model, more regulatory emphasis on product transparency and rising investor awareness of ETFs.
“While active ETFs are a nascent product category today, they have the potential to initiate a new growth curve for the asset management industry as a whole,” McKinsey & Co. added. [BlackRock CEO Says Industry to Lose Money on Active ETFs]