By Toroso Asset Management
Industry projections by some of the brightest minds in ETFs.
In this special edition of our commentary, we are publishing the thoughts of some of the most prominent figures in the ETF industry about where they think the industry is going. In a nutshell, we discuss their projections of: international growth; thematic investing; institutional adoption; and the lowering of fees in conjunction with consistent margins.
“Over the next five years, we will have at least a doubling of the industry,” says Burton Malkiel, Professor Emeritus a member of the TETF Index investment committee and a recognized trail blazer of the ETF Industry.
“There was a lot of hype over digital asset management or robo-advisors. A lot of that hype has been deflated. We’re now starting to build a strong base, and younger investors will soon manage their money through ETFs,” comments Kris Monaco, Co-Founder of Level ETF Ventures.
“I’m not surprised by the growth in international funds, but it is amazing that none have grown faster than those in the U.S. I think that we’re at a tipping point where growth will potentially soar outside the U.S.” Linda H Zhangco, Founder Purview Investments
“We know the U.S. market’s been growing at 20 percent. We know that TETF Index has tracked this growth extremely well. That said, the U.S. market is way ahead. About 70 percent of the assets are there, but what we’ve seen this year is the international market pull ahead.” Guillermo Trias, Managing Partner & CEO
Clients will continue to favor ETFs
At Toroso we believe that in the next five years, the industry will hit $10 trillion in AUM, which is consistent with the 20 percent annualized growth that we’ve seen over the last 20 years.
The flows in the last year and a half have been primarily big institutions adopting low-cost beta and that’s usually the first wave. Institutions have really stayed away from ETFs until the last 18 months. “Now, they’ve really gone in heavy and they’ve started with the low-cost beta. Once they completely adopt that, they’ll start to realize those 2 in 20 hedge funds and other things that they’ve been doing can actually be done in a low-cost, transparent way”, says Mike Venuto, Co-founder and CIO for Toroso Investments. “Institutions are going to come from just owning the cheap beta into some thematics and multi factors over the next couple of years.”
Now, the key factor that could accelerate the growth of the industry beyond that 20 percent a year is a correction…
Learn more about these predictions by downloading the report here.
This article was written by the team at Toroso Asset Management, a participant in the ETF Strategist Channel.
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