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ETF Assets to Double, Hit $2 Trillion by ’15, Says Report

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Assets in exchange-traded funds should double to $2 trillion before the end of 2015 and grow increasingly diverse, according to a new whitepaper from BNY Mellon and Strategic Insight released Wednesday.

The report, ETFs 2.0: The Next Wave of Growth and Opportunity in the U.S. ETF Market, finds that traditional index-based ETFs are likely to account for a falling overall share of ETF assets as non-traditional and alternative funds take a larger slice of the market, which may give some investors more of a need to turn to advisors and financial planners.

“The next wave of growth for ETFs is being driven by new asset classes, new indexes and new ways to use ETFs as tools for portfolio construction,” said Joseph Keenan, head of global exchange-traded fund services at BNY Mellon Asset Servicing, in a press release.

“The ever increasing sophistication of these newly created ETFs can pose operational and distribution challenges for asset managers,” Keenan explained. “However, with detailed planning and a focused strategy, a variety of innovative exchange-traded products can be brought to market to effectively meet investors’ needs.”

Since the end of 2008, non-traditional ETFs have grown from 18% of the market to an estimated 30% of U.S. ETF assets by March 31, 2011, according to Strategic Insight’s Simfund database.

The BNY Mellon-Strategic Insight report predicts this trend will continue as investors become less likely to simply allocate their assets among growth stocks, value stocks, large cap stocks, small cap stocks and other traditional categories.

“Non-traditional ETFs will continue to increase their share of the ETF market,” said Loren Fox, senior research analyst at Strategic Insight and an author of the report, in a statement. “Commodity, leveraged, inverse, actively managed and hedge-fund-like ETFs are among the non-traditional ETF types that should see market share growth between now and 2016.”


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