The U.S. exchange traded fund industry has amassed over $2.3 trillion in assets under management, and this may be only the beginning.
According to a recent PwC survey of more than 60 firms, global ETF assets are likely heading to $8.2 trillion, with the U.S. portion going up to at least $6.2 trillion by 2021.
“As investors get further educated on the product and how to use it and find different ways to use it, it’s only going to help growth. There’s a reasonable possibility those projections will be achieved,” Bill Donahue, managing director with PwC’s Asset Management Assurance Practice, told CNBC. “A number of folks we talked to were even more bullish on the growth opportunities.”
While the $13.2 trillion mutual fund industry still dwarfs ETFs in size, traditional open-end funds are bleeding assets. Mutual funds have seen a 3.6% decline in assets under management over the past 12 months, whereas ETFs have grown 4.1% over the same period.
Related: Institutional Investors to Support ETF Industry Growth
Contributing the shrinking mutual fund industry and ongoing ETF growth, low costs is seen as a major investment factor – ETF fees typically come in at a fraction of what actively managed funds are charging, along with tax efficiencies and robust liquidity.
[related_stories]“We were surprised related to the low-cost consideration. It’s hard to go a day without seeing some firm lowering their fees to be competitive,” Donahue said. “While tax efficiency is certainly a consideration, people obviously are refocusing on performance more so.”
The ETF industry is dominated by the three big players: BlackRock, Vanguard and State Street Global Advisors, which hold a combined $1.9 trillion in assets under management. Nevertheless, others like Invesco PowerShares, Charles Schwab, WisdomTree and First Trust have been gaining traction.
Related: ETFs Are a Hit Among Financial Advisors
Assets invested in exchange traded products, which include both ETFs and exchange traded notes, have hit a new record high of $3.177 trillion at the end of June 2016, according to ETFGI data. The global ETP industry had 6,424 offerings with 12,268 listings from 284 providers across 65 exchanges in 53 countries.
In the U.S., there are 1,936 ETPs from 89 sponsors and 118 index providers listed on 3 exchanges, with $2.322 trillion in assets under management, according to XTF data.
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