Will ETFs be a $30 Trillion Industry in 10 Years?

“Globally we’re at $5 trillion in ETF assets,” said Lake.

What has led to the growth of ETFs in Europe is not just the inflow of capital into this investment vehicle, but also the mindset behind the movement.

“It goes back to the benefit-rich ETF vehicle,” said Lake. “We think about the ETF as a technology, it’s not an investment strategy. It’s just a technology or a wrapper that allows you to access the markets.”

Just like the way investors in the US can corner specific areas of the market in Europe, European investors can get exposure to the US via ETFs with all the normal benefits that go with the investment vehicle, such as diversification and tax treatment. With the increased usage of ETFs, the path for innovation has also opened up, allowing JP Morgan to offer ETFs to European investors with an active management component.

“We see this as big innovation in the industry,” said Lake. “We’re taking this vehicle that’s relatively new in the grand scheme of things and combining it with a significant active capability.”

Bullish Growth in 10 Years

Lake sees only more growth for ETFs on the horizon. The reasons spurring the growth include the notion that the ETF is viewed as a technology will help further fuel growth in sectors that will continue to see innovation, such as fixed income.

Second, Lake sees active delivery through the ETF wrapper as being a major market mover in offering ETF products that discern themselves from the masses. The active management of ETFs, according to Lake, will be a major driver in contributing to the growth of the industry.

“The ETF industry could be $30 trillion by the year 2030,” said Lake. “I say that because all we would have o do is maintain the same growth trajectory that we’ve had leading up to this point.”

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