Global ETF assets could more than double by 2020: Fuhr
Exchange traded funds should grow significantly more popular with investors, but the market faces challenges, including a lack of client understanding, a specialist has warned.
Deborah Fuhr, managing partner of research firm ETFGI, predicted that assets invested in the industry worldwide could reach US$7trn (£4.5trn) by 2020 and US$17trn (£10.9trn) by 2025.
Earlier this month, figures from the same firm revealed that US$2.97trn (£1.9trn) was invested in the 5,823 exchange-traded products around the world at the end of the second quarter of 2015.
This meant that ETPs had surpassed hedge funds in terms of assets invested globally, which stood at US$2.9trn (£1.9trn) at the end of the second quarter according to Hedge Fund Research.
However, Ms Fuhr warned that the ETF industry still faced significant challenges.
| Assets invested in the global ETP industry at the end of Q2 2015 | Assets invested in the hedge fund industry at the end of Q2 2015 |
| US$2.971trn (£1.909trn) | US$2.969trn (£1.908trn) |
Source: ETFGI and Hedge Fund Research
She said: “There are a number of challenges that make it difficult for people to find ETFs and invest in them.
“Many platforms often cannot work with ETFs. You tend to find that some platforms do not accept ETFs while others will make it quite hard to find them.”
Ms Fuhr, who was speaking at an event held by Bloomberg, also said more education would be needed before investors began to feel comfortable about using ETFs.
Meanwhile, Hector McNeil, chief executive of Wisdomtree Europe, told the same audience advisers would need to better pitch ETFs to their clients.
He said: “If an adviser goes to a client and says the product is outperforming an index, that is not working.
“But if the adviser says there is a new fund with a good yield and the fund is better in terms of charges than other funds, that is what it will take to open the markets up.”
Adviser view
Andrew Swallow, director of London-based Swallow Financial Planning, said: “ETFs are marketable and cheap so there is no reason why they should not continue to increase in popularity.”
