The next phase of ETF growth is unlikely to be a simple extension of the last one. With the wrapper firmly established, the more important question now is which use cases, asset classes and investor needs will define the next decade.
Active management will clearly be part of the answer. As product launches (particularly in Europe) proliferate, industry projections from PricewaterhouseCoopers (PwC) suggest global active ETF assets could rise from about USD 1.7 trillion in 2025 to around USD 4 trillion by 20308, while some forecasts are even more bullish. This reinforces a shift already underway in that investors increasingly want the operational advantages of the ETF wrapper without limiting themselves to plain-vanilla benchmark exposure.
Regional growth is worth watching closely. The same PwC survey data suggests total European ETF assets could more than double or more by 2030 (with some projections reaching USD 5.5 trillion), while total Asia-Pacific ETF assets could rise toward USD 5 trillion over the same period.8 If that happens, the global ETF market will look less US-centric, more competitive and potentially more diverse in structure and use case than it does today.
When thinking about the future it can be tempting to focus on the flashy and shiny aspects of product development. However, it is worth remembering that the bulk of ETF flows go into core benchmarks and this is unlikely to change. Serving as a key portfolio building block for investors of all shapes and sizes, allocations to core index exposures via the ETF wrapper is likely to remain a key driver of growth. Equally, if geopolitical tension and currency volatility stay elevated then more operational and risk management focused areas like currency hedged share classes should be in demand.
All of this creates both opportunity and responsibility for providers. A wider ETF toolkit gives investors more ways to express views, manage risk and build portfolios efficiently, but it also increases the need for clarity around structure, liquidity, index construction and suitability. As we know, wrapper standardization does not translate to interchangeable underlying exposures.
In which case, scale alone won’t be enough. The next phase of ETF competition is likely to depend on combining product breadth with research, implementation quality, trading expertise with the ability to help clients use ETFs well.
It is worth pausing, at this point, to ask what Nathan Most might make of all this.
His original insight was architectural. He saw that the mechanics of a commodity warehouse receipt – the way physical goods could be represented by a tradeable certificate without moving the underlying stock – could solve a problem that decades of mutual fund innovation had not. The basket could trade, the creation and redemption mechanism could operate in the background and the structure could be simultaneously efficient for institutions and accessible for individuals. It was an elegant solution to a specific market-structure problem, and Most pursued it for years before regulators and exchanges were persuaded.
Whether he could have imagined spot Bitcoin ETFs, buffer strategies with options overlays, or active managers migrating entire mutual fund ranges into his wrapper is an open question. But the principle he applied – find a cleaner structure for something investors already want to do – has never stopped being relevant.