The global Exchange-Traded Fund market is poised for a meteoric rise, with analysts predicting a staggering growth by 2035. This translates to a projected asset value of a whopping $35 trillion, dwarfing the current figure of $13 trillion. Eric Balchunas, Senior ETF Analyst for Binance, believes this surge is inevitable, driven by the inherent appeal of ETFs and the exciting new frontier of crypto-based offerings.
Low Costs, High Liquidity: A Recipe For Investor Attraction
ETFs have long been a darling of investors due to their inherent advantages. Unlike actively managed funds with hefty fees, these types of funds boast low costs, making them a budget-friendly option for investors seeking broad market exposure.
Additionally, their intra-day liquidity allows for easy buying and selling throughout the trading day, a stark contrast to the less flexible structure of traditional mutual funds. Tax efficiency and the ability to tailor investment strategies through diverse offerings further solidify their position as a go-to investment tool.
35 in 35: We predicting ETFs are likely to reach $35T in assets globally by 2035 (triple from $13T today). This is based on 10% CAGR (past decade was 17%, decade bf was 25%) which is arguably fairly modest (bc mkt returns likely less great). Their low-costs, intra-day liq, tax… pic.twitter.com/g7Y8olmBZp
— Eric Balchunas (@EricBalchunas) June 14, 2024
Balchunas emphasizes these core strengths as a key driver of future growth. “ETFs offer a compelling combination,” he states. Low costs, intra-day liquidity, tax efficiency, and flexibility will continue to attract investor cash, leading to a snowball effect of more products, innovative designs, and a growing sales force promoting them, he points out.
Cryptocurrency Takes Center Stage: A New Frontier For ETFs
The emergence of spot crypto exchange-traded fund is a game-changer for the industry. These innovative products directly track the price of specific cryptocurrencies, allowing investors to gain exposure to this burgeoning asset class without the complexities of managing individual crypto holdings.
This convenience factor, coupled with the ability to hold crypto ETFs in traditional brokerage accounts, is proving highly attractive to investors dipping their toes into the crypto market.
The success of these initial offerings paves the way for further expansion. The article predicts that more cryptocurrencies, like Solana, could be next in line for ETF listings. This not only broadens investor options but also lends further legitimacy to the cryptocurrency market as a whole.
Tokenization And Long-Term PotentialWhile the near future belongs to ETFs and crypto, some analysts acknowledge the burgeoning potential of asset tokenization. This technology involves converting traditional assets like stocks or real estate into digital tokens tradable on a blockchain.
A Bullish Market With Room For NuanceThe overall outlook for the ETF market is undeniably bullish. The confluence of low costs, investor-friendly features, and the inclusion of innovative crypto assets paints a picture of a dynamic and rapidly growing market.
Despite some nuances, the ETF market’s trajectory appears firmly on an upward climb. With its focus on convenience, affordability, and diversification, ETFs are poised to be a dominant force in the investment landscape for years to come.
Featured image from Getty Images, chart from TradingView
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