The Global Exchange Traded Fund The market is poised for a meteoric rise, with analysts predicting meteoric growth by 2035. This translates into a projected asset value of a whopping $35 trillion, eclipsing the current figure of $13 trillion . Eric Balchunas, senior ETF analyst at 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 attracting investors
ETFs have long been a darling of investors due to their inherent advantages. Unlike actively managed funds with high fees, these types of funds have low costs, making them an economical option for investors looking for broad market exposure.
Additionally, their intraday liquidity allows for easy buying and selling throughout the trading day, in stark contrast to the less flexible structure of traditional mutual funds. Tax efficiency and the ability to adapt investment strategies through diversified offers further strengthen their position as an essential investment tool.
35 out of 35: We forecast that ETFs will likely reach $35 trillion in assets globally by 2035 (triple from today’s $13 trillion). This figure is based on a CAGR of 10% (last decade was 17%, next decade was 25%), which is arguably quite modest (BC capital market returns are likely less good). Their low costs, their intraday cash, their taxes… pic.twitter.com/g7Y8olmBZp
– Eric Balchunas (@EricBalchunas) June 14, 2024
Balchunas highlights these core strengths as a key driver of future growth. “ETFs offer an interesting combination,” he says. Low costs, intraday liquidity, tax efficiency and flexibility will continue to attract investor liquidity, leading to a snowball effect with more products, innovative designs and a growing sales force promoting them, he emphasizes.
Cryptocurrency Takes Center Stage: A New Frontier for ETFs
The emergence of spot crypto exchange-traded funds is a game-changer for the industry. These innovative products directly track the price of specific cryptocurrencies, allowing investors to gain exposure to this growing asset class without the complexities of managing individual cryptocurrency holdings.
This convenience factor, coupled with the ability to hold crypto ETFs in traditional brokerage accounts, proves very 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, as Solana, could be next in line for ETF listings. This not only broadens investors’ options, but also lends more legitimacy to the cryptocurrency market as a whole.
Tokenization and long-term potential
While the near future belongs to ETFs and cryptocurrencies, some analysts recognize the growing potential of asset tokenization. This technology involves converting traditional assets such as stocks or real estate into digital tokens tradable on a market. blockchain.
A bull market with room for nuance
The overall outlook for the ETF market is undeniably optimistic. 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 trajectory of the ETF market seems decidedly upward. With a focus on convenience, affordability and diversification, ETFs are poised to become a dominant force in the investment landscape for years to come.
Featured image from Getty Images, chart from TradingView
