The ETF market is likely to double by 2020, but the industry needs to act on digital innovation in order to improve their distribution methods, new research from EY has found.
Assets under management (AUM) in the ETF industry is expected to climb to US$6 trillion by 2020, up from the US$3.4 trillion AUM recorded in August 2016, EY said, continuing the industry’s strong growth trend, which over the last decade has averaged 21.5 per cent per annum.
“In Australia, we are seeing retail investment continue to dominate the ETF market,” said EY wealth and asset management leader for Oceania Antoinette Elias.
"Promoters believe that the regulatory reform of advice and the uptake by advisers will continue to give them further traction among high net worth and mass affluent investors.”
EY cautioned however that the ETF industry “lags behind when it comes to innovative distribution models”, with only 10 per cent of survey respondents considering their model suitable for now and the future, and 20 per cent of respondents who see their distribution model as “outright insufficient”.
“The industry needs to embrace digital innovation – and investors’ appetite for digital technology – to define a new distribution model,” Ms Elias said.
“Smart firms will be those that address immediate and long-term challenges to offer existing and future customers an improved, integrated approach.”