Bloomberg News

U.S. Exchange-Traded Fund Assets to Double by 2015, BNY Says

July 13, 2011

(Updates with percentage of ETF assets in non-traditional products in second paragraph.)

July 13 (Bloomberg) -- Assets in U.S. exchange-traded funds may double to $2 trillion before the end of 2015, driven by the growth of non-traditional products, Bank of New York Mellon Corp. and consulting firm Strategic Insight said.

U.S. ETFs will see the most expansion from commodity-based, leveraged, actively managed, hedge fund-like and other alternative products, according to a statement today from the firms. Non-traditional funds have grown to an estimated 30 percent of ETF assets as of March 31, from 18 percent at the end of 2008, according to the statement.

“The next wave of growth for ETFs is being driven by new asset classes, new indexes and new ways to use ETFs as tools for portfolio construction,” Joseph Keenan, head of global ETF services at New York-based BNY Mellon, said in the statement.

ETF industry assets in the U.S. surged 15-fold to $992 billion in the decade ended Dec. 31, data from the Investment Company Institute show. Stock and bond mutual funds rose 76 percent to $9.01 trillion in the same span, according to the Washington-based trade group.

The study identified traditional ETFs as those tracking indexes in the most popular investing categories, such as large- company stocks or shares of companies seen as undervalued. ETFs typically track an index and, unlike mutual funds, trade like stocks throughout the day on an exchange.

BNY Mellon is the largest custody bank with $25.5 trillion under custody and administration. New York-based Strategic Insight advises investment-management companies.

--Editors: Steven Crabill, Larry Edelman

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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