According to a Tiburon Strategic Advisors study, ETFs and other indexed products will gather $10.4 trillion in assets by 2017.
By then, total assets will rise from 7% of total world equity market capitalization to 25% as net flows increase to $665 billion, or up 100%, reports Donald Jay Korn for On Wall Street.
The U.S. ETF business currently stands at about $1.4 trillion.
“Active managers are unable to consistently beat the market while index managers offer lower costs and better tax efficiency,” Chip Roame, Tiburon’s managing partner, said in the article. “ETFs themselves have even more benefits.”
For instance, ETFs have intraday trading, portfolio transparency, use of margin and short trades.
“ETFs are becoming widely utilized for a host of investment management strategies, including sector rotation and tactical asset allocation,” Roame added. “ETFs will absolutely explode in growth when they get into 401(k) plans… the last holdout of positive mutual fund flows.”
Moreover, Roame sees a growing interest in personalized indexing, which will grow to $33 billion by 2017.