RECORD growth in US exchange-traded funds (ETF) will power the industry’s assets to US$15 trillion by 2028 from roughly US$7 trillion currently, according to JPMorgan Chase & Co’s asset management arm.

“I think we’re just on the very beginning cusp of what could be substantial growth,” JPMorgan Asset Management’s global head of ETF solutions Bryon Lake said on Bloomberg Television’s ETF IQ from the ETF Exchange conference in Miami, Florida. “My view, in five years from now, the ETF industry more than doubles to US$15 trillion.”

Explosive growth has propelled assets in US ETFs to roughly US$7 trillion from under US$2 trillion a decade ago. Last year saw 430 new funds launch even as stocks and bonds suffered their worst returns in decades, which nearly eclipsed 2021’s record of 459 launches.

While the first ETFs introduced passive, index-tracking strategies to the masses, actively managed ETFs have boomed in popularity in recent years. The JPMorgan Equity Premium Income ETF has been a beneficiary of that trend — the fund absorbed nearly US$13 billion in 2022, surpassing Cathie Wood’s ARK Innovation ETF for the biggest annual inflow to an active fund.

While active ETFs currently comprise of about 5 per cent of total ETF assets, Lake sees the strategies taking market share over the next few years.

“I think 10 per cent to 20 per cent of that could be in active,” Lake said. “So up to US$3 trillion in the next five years could be inactive.” BLOOMBERG

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