Download Advisory Partner/MD/Director Call - Act-On

HOW TO LAUNCH AN ETF
The Next
Trillion Dollars:
An In-Depth Look at the ETF
Market of Tomorrow
NIGEL BRASHAW
Partner
PwC
THE NEXT TRILLION
DOLLARS: AN IN-DEPTH
LOOK AT THE ETF MARKET
OF TOMORROW
22nd January 2017
Nigel Brashaw
Partner, PwC
Global ETF Leader
Boston, MA
What will we be covering this afternoon?
1. WHERE
HAVE WE
COME
FROM?
(VERY
BRIEFLY)
2. WHERE
ARE WE
NOW?
(BRIEFLY)
3. WHERE
ARE WE
GOING?
.
4. OTHER
TOPICS &
QUESTIONS
.
Where are we coming from? Where are we
now?
$3.0
$2.56
trillion
Assets ($ Trillion)
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
19941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016
1994
2000
2005
2010
2014 2016
Source: Strategic Insight MF
Note: Data includes ETFs, ETNs & UITs
Progress in Trillion Dollar Increments
$1T
$2t
$2.6t
$3.6t
1994 - 2010
2014
TODAY
201?
The next $1 trillion prediction – Our View
ETF AUM
$3.6T in 2018
Where will the next trillion dollars be invested?The boring answer
“Smart Beta” AUM
$513bn
Non “Smart Beta” AUM
- $2.0T
Source: Morningstar
Active AUM not shown – c$25bn approximately 95% of which is in active
bond funds.
Structural Factors Driving Growth
We see 4 key developments driving continued growth in assets under managment
ONLINE
PLATFORMS
We believe the
technology is here to
stay and will
improve. Key impact
will be at incumbent
organizations.
RETAIL INVESTORS
Representing
approximately 50%
of assets in ETFs
individual investors
are an important
group who increase
their adoption of
ETFs over time.
INSURANCE
COMPANIES &
OTHER
INSTITUTIONS
Insurance companies
are users and will
increasingly be
issuers of ETF
products.
FINANCIAL
ADVISORS &
INTERMEDIARIES
Regardless of
changes in
regulations – the
lower fee proposition
of ETFs is attractive
to financial advisors
and likely will remain
so.
Why are investors buying more and more ETFs?
VS
What haven't we talked about?
There is a lot of press comment about the following topics:
ACTIVE ETFS
LIQUID ALTERNATIVES
Currently active equity
ETFs are at a
significant
disadvantage to other
products – regulatory
changes could open
up a whole new
market to ETFs
There is a lot of media
talk about the
potential for liquid
alternatives – but
there remain very few
assets
FURTHER PRODUCT
INNOVATION
Smart Beta is on the
frontier of innovation
in the asset
management industry
(not just ETF’s), what’s
next?
An interesting question might
be: “What role to ETFs play in
the future of Asset
Management?”
Trend
Good for ETFs
Digitization
✔
Cost/Fee Transparency
& Pressure
✔
Shift to Passive
✔
Regulation
? (Probably)
Demographics
? (Probably)
ETFs and the next $10 trillion dollars Disruption in Asset Management
DEMOGRAPHICS
Key trends include impact
of ‘Baby Boomer’
drawdowns, ‘Millennials’
and the increase in wealth
in Asia-pacific
MACRO ECONOMIC
CONDITIONS
Volatility is probably not
going away for the
foreseeable future
NEW BETA PRODUCTS
REGULATIONS
The average fee for ETFs
has decreased 15% since
2010 (Morningstar).
Regulatory change in the
US and elsewhere can
provide opportunities as
well as impediments
TECHNOLOGY/DIGITAL
NEW ENTRANTS
How will ETFs capitalize on
changes/trends such as
Blockchain, artificial
intelligence and big data
Will new entrants launch
products?
Nigel Brashaw
Assurance Partner – PwC Global ETF Leader
Boston, MA
Phone: +1 617 530 4487
Email: [email protected]
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