Over the last 10 years, assets in ETFs have grown over 30% annually, compared to a 5% to 6% growth in mutual funds, according to consulting and research shop
Today, the ETF industry is comprised of institutional and retail investors, as well as passive and increasingly active funds. But what are the next growth opportunities for ETF providers?
"If I look at the pool of capital driving ETF growth, insurance companies are a new avenue for ETF growth," said
"Most ETF providers, ourselves included, have gone through with the
"They're looking for exposure to corporate and high-yield bonds and the only instrument that is currently working for them from a liquidity perspective is ETFs. Even in this volatile environment, we had our
Gamba expects U.S. ETF flows this year to be at least as strong as last year, which was the largest inflow year for the industry growing at 12% organically and
Looking further into the future, iShares has a very optimistic view of the U.S. ETF market as a whole. In fact, the firm is predicting that U.S. ETFs will reach
Overall, there are currently 5,108 funds as of
In the 1990s, ETFs were institutional investment vehicles offering broad exposure to equities, according to Quigg. A decade later, fee-based advisors and intermediaries jumped into the mix and became more prevalent in the product usage. Quigg said that institutions will continue to embrace exchange-traded funds at the margin and, more importantly, at the core of what they do.
Quigg said active ETFs such as his firm's own SPDR Blackstone/GSO Senior Loan ETF, which launched in April, have a bright future. The fund has gathered
Gamba added that more institutions are using ETFs as a core investment of their portfolio as opposed to using them as liquidity and exposure vehicles, and he expects that to also drive a lot of growth in the industry.
However, Gamba said his firm is not currently focused on active fixed income funds. Rather, iShares is currently focused on growing its minimum volatility ETFs, which are non-cap weighted ETFs. "We've grown our stable of minimum volatility ETFs to
"ETF product development in general slowed in 2012 as 153 new ETFs were launched compared to 229 in 2011," noted
"A lot of our new business development discussions have been around supporting active ETFs as well as enhanced beta products," said McNinch.
"People are taking a cautious approach to this space and I think there is more appetite for fixed income active products for the rest of the year and into next year because there is less concern around transparency and managers are more willing to disclose their holdings. That's the area where I would say has the most growth potential," he added. McNinch also noted that a lot of active large mutual fund managers are now looking at entering the active ETF space.
"Some of them have filed to launch active ETFs and I think you'll see a number of them really start to go into this space," he said.
"Some of them are taking a more cautious approach in launching one or two products to gauge their ability to gather assets and some of them are really looking at the big bang approach by pushing out a eries of active ETF strategies."
|Copyright:||(c) 2013 Financial Planning. All rights Reserved.|
|Source:||Source Media, Inc.|