The exchange traded fund universe is expected to maintain its phenomenal expansion rate as more investors pick up the nifty investment vehicle to easily and cheaply access global markets.
According to a PricewaterhouseCoopers report, titled ETFs 2026: The next big leap, executives representing over 80% of worldwide ETF assets, project the global ETF market to grow to $20 trillion by 2026, representing a 17% compound annual growth rate, as the industry’s “phenomenal momentum” of the past five years continues, the Financial Times reports.
“Given global ETF AUM growth of 22 percent over the past five years ending December 2020, combined with record inflows, new entrants, innovative products, and distribution opportunities, we believe that a projection of over $20tn global ETF AUM by 2026 can be achieved,” according to the PwC report.
Global ETF assets have almost tripled to more than $10 trillion in November last year from $3.4 trillion in 2016.
PwC revealed that 58% of respondents to its survey anticipated ETF assets to surge to at least $18 trillion by 2026, or a 14.6% compound annual growth rate between June 2021 and June 2026.
The survey also showed that 45% of respondents said over half of their 2022 product launches will be focused on environmental, social, and governance investing and that over 80% believe online platforms represent the primary source of future demand for ETFs.
“Accelerating innovation is opening up a wealth of investment opportunities and customer choice within the ETF market” and that thematic, equity, and cryptocurrency ETFs in particular “stand out as potential sources of demand and untapped opportunity”, according to the PwC report.
Increased opportunities in customer choice and investment options inside the market for ETFs are reflective of faster innovation and investments available. Consequently, the need to stand out in an increasingly competitive marketplace will encourage further development and innovation in new investment products.
The PwC survey showed that thematic investing is ranked among one or two on respondents’ list of high-demand areas for the following 2 to 3 years.
For more news, information, and strategy, visit ETF Trends.