Wider ETF adoption by retail investors, more bond space launches and growing ESG strategy demand could help the ETF industry double by the end of 2030, according to fund data provider Refinitiv Lipper.
Assets under management could grow from €1.2 trillion at the end of 2022 to €2.5 trillion by the end of 2030 as several trends grow the sector, said Detlef Glow, head of Lipper EMEA Research, in its European ETF Industry Yearbook.
Wider adoption of retail wealth management platforms such as Nutmeg or neo-brokers, the growth of ETF savings plans and the launch of direct-to-consumer platforms should drive equity ETF flows, he said.
Additionally, bond segment growth is expected to be driven by institutional investors, particularly after the current rising rate and high inflation environment passes and with new product launches.
Greater demand for sustainable investment products may lead to more inflows for these strategies as regulatory standards are fine-tuned, he noted.
ESG ETFs could also fuel demand for thematic investment strategies, including ESG-related themes like alternative energies or electronic vehicles.
The non-transparent or active ETF space could also see growth once European regulators approve them, especially given their popularity in the US.
Glow noted that "a possible approval of active ETFs would be a game changer for the whole fund industry ecosystem in Europe and will make the forecast of a doubling in AUM obsolete, as in this case, the growth rate of the AUM might be much higher.
Glow added that a Europe-wide adoption of ETFs by retail investors, in combination with new fit-for-purpose conventional and ESG-related bond and equity products, would be core drivers for the future growth of the European ETF industry.
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