PwC expects accelerated growth in ETFs over the next five years, with global assets under management (AUM), expected to exceed $7 trillion by 2021.

 

A new report, ‘ETFs: A roadmap to growth’ predicts the market will achieve further significant growth through entering new markets, expanding distribution channels and asset classes.

 

Many ETF providers are expected to expand their global footprint and offer ETF products across borders to compete outside their domestic markets. PwC believes that, to be successful, firms will need to develop an understanding of local and global tax laws and regulations. 

 

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  1.   The North American ETF market is expected to grow to $5.9 trn by 2021 (a 23% cumulative annual growth)

 

  1.   The European market is expected to grow 27% annually – reaching $1.6trillion AUM by 2021

 

  1.   Asian firms expect ETF AUM to reach $560bn by 2021 – an 18% annual growth rate over five years

 

 

Advances in technology and data analytics are expected to be significant contributors to the growth of ETF markets by encouraging new product creation and evolution in distribution channels. Digital technology and ‘big data’ will continue to enable successful firms to improve decision making processes, streamline costs and transform investor relationships.

  

Nigel Brashaw, global ETF leader at PwC, commented: “The global ETF market has a bright future ahead but the next few years will not be without their challenges. The ETF market continues to be increasingly crowded, particularly in North America and Europe, where both maturity and momentum continues to dominate.

  

 “Many firms are looking to expand their global footprint which presents challenges as well as opportunities with respect to local and global regulations, tax laws and establishing working relationships with distribution partners.

  

 “Firms across the globe that wish to take advantage of the booming ETF industry will need to invest in investor education, differentiated products and strong distribution channels. There is plenty of competition in the sector and we expect the industry to grow at a healthy and accelerated rate.”