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Nov 12, 2021

ETF assets to exceed $20 tn before 2026, predicts ETFGI

Forecast follows record-breaking 2021 for globally listed ETFs and ETPs

The head of London-based research and consultancy firm ETFGI has predicted that assets invested in ETFs across the globe will exceed $20 tn before 2026.

Speaking to IR Magazine, Deborah Fuhr, managing partner, founder and owner of ETFGI, made the forecast hot on the heels of the consultancy’s latest research. She says: ‘Investors realize it is hard to find active funds that consistently beat their benchmark and, over the long run, lower-cost investments deliver better returns. I expect we will see the assets invested in ETFs globally exceed $20 tn before 2026.’

Released this week, ETFGI’s latest report finds that asset flows into globally listed ETFs and exchange-traded products (ETPs) saw record net inflows of $1 tn in the first 10 months of 2021.

In figures that show an increase on the $538.26 bn gathered at this point last year, ETFGI reports that ETFs and ETPs listed globally gathered net inflows of $116.21 bn during October alone, bringing year-to-date net inflows to $1.04 tn. This figure is also significantly higher than the previous record of $762.77 bn gathered in the whole of 2020.

Assets invested in the global ETFs/ETPs industry increased 5 percent in a single month from $9.5 tn at the end of September 2021 to $9.98 tn – the highest on record – at the end of October, according to preliminary data collected by ETFGI’s October 2021 global ETFs and ETPs industry landscape insights report.

The results represent the 29th month of consecutive net inflows, with equity ETFs and ETPs gathering a record $716.48 bn in year-to-date net inflows 2021. The S&P 500 saw the biggest increase, gaining 7.01 percent in October, and positive growth of 24.04 percent this year so far.

In developed markets outside of the US, of the overall increase of 2.5 percent in October, Canada and Sweden experienced the biggest gains of the month (7.46 percent and 7.21 percent, respectively), while Japan suffered the biggest loss at 3.43 percent. Results for emerging markets were up overall by 1 percent during October, with Peru leading the way, up 14.45 percent followed by Egypt, up 10.76 percent. Brazil (down 10.72 percent) and Chile (down 5.66 percent) saw the biggest decreases.

Fuhr notes that the global pandemic has also had an impact. ‘All types of investors – institutional investors, financial advisers and retail investors – are increasing their use of ETFs as tools to implement their asset allocation,’ she says. ‘Since Covid-19, many people have spent more time thinking about their investments and their investing goals. ETFs work very well in digital investment portals.’

ETFGI reports that substantial inflows during the month of October 2021 can be attributed to the top 20 ETFs by net new assets, which collectively gathered $49.41 bn. The iShares Core S&P 500 ETF gathered $9.54 bn, the largest individual net inflow. The top 10 ETPs by net new assets collectively gathered $1.99 bn over October.