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Rating:Merrill Exec Sees $200B U.S. ETF Growth in 12 Months  Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, April 18, 2013

Merrill Exec Sees $200B U.S. ETF Growth in 12 Months

Reported by Tommy Fernandez

The U.S. ETF market will grow $20 billion over the next 12 months and will likely hit$2.5 trillion in five years, according to Jon Maeir, senior investment strategist for ETF Portfolio Solutions at Merrill Lynch Wealth Management.

Maeir makes these forecasts in his recent white paper, ETFs: Beyond the Basics. Other insights from the paper include:

  • Since the first ETF listing in the U.S. almost two decades ago, ETFs have grown into a $2.0 trillion global industry  with most of the growth coming in the past five years. Over 70% of the global industry is concentrated in the U.S.
    Merrill Lynch team expects that U.S. ETF market assets will grow by roughly $200 billion over the next 12 months, with assets likely to reach roughly $2.5 trillion within the next five years from a combination of organic growth and existing assets appreciating in value.
  • The correlation between market volatility and index product and ETF use has been high recently. However, the risk in indexation is also partly due to a sweeping set of changes in the asset management industry that emphasizes asset allocation over stock-picking, and have tended to benefit low-cost, broad market exposure vehicles.
  • Exposure to previously inaccessible or cost-prohibitive markets and expansion of products in non-U.S. markets, especially in Europe.
  • Strong demand for index products in what have been volatile markets in the years following the 2008 financial crisis, during which active managers have largely underperformed their benchmarks.
       

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