Nearly three-out-of-ten (28%) executives around the world who responded to PwC’s Exchange-Traded Fund (ETF) survey anticipate that global ETF Assets under Management (AuM) will more than double to top US$30 trillion by 2029, representing a compound annual growth rate (CAGR) of more than 18.4% over the next five years. 60% of survey respondents expect global ETF AUM to reach at least US$26 trillion by 2029, representing a CAGR of at least 15.1% over the next five years. 

Global ETF assets under management (AuM) grew by a record 27% in 2024 to reach US$14.6 trillion by 31 December 2024. 2024 saw record ETF net inflows as follows: US ($1.1 trillion), Europe ($266 billion), Asia-Pacific ($149 billion) and Canada ($58 billion).   

These are some of the key findings from PwC’s Global ETF report ‘ETFs 2029: The path to US$30 trillion’ published today, which explores the latest trends and future outlook in a fast expanding and evolving ETF market. 

Regions - US leads in AuM value with Canada having the highest growth rate 

Six out of ten (61%) US survey respondents expect US ETF AuM to reach at least US$18 trillion by June 2029, representing a CAGR of 14.9%. A similar proportion (61%) of European survey respondents are of the view that European ETF AuM will reach at least US$4 trillion by June 2029, representing a CAGR of 15.5%. 60% of Canadian survey respondents are of the view that Canadian ETF AuM will reach at least US$1 trillion by June 2029, representing a CAGR of 23.2%. 50% of Asia Pacific survey respondents think that APAC ETF AuM will reach at least US$3 trillion by June 2029, representing a CAGR of 16.5%.

Globally, ETF inflows once again exceeded mutual funds in 2024 for the third consecutive year. The gulf could be even more marked over the next five years. The 15.1% ETF CAGR anticipated by most survey respondents is well over double the 5.9% that PwC projects for the global asset and wealth management industry as a whole. Although ETF AuM is still lower than mutual funds, the gap is narrowing. For example, in 2019, global ETF AuM was 17% of global mutual fund AuM. It’s now 29%. 

Europe - room for significant growth to realise its full potential 

Most European survey respondents (61%) believe that the region’s ETF AuM will reach at least US$4 trillion by June 2029, a CAGR of 15.5%. Nearly a quarter (22%) expect that ETF AuM will reach US$4.5 trillion or more in that time.

Europe’s ETF AUM grew by 24% to reach US$2.2 trillion in 2024, with record ETF net inflow of US$266 billion. Over three-quarters (78%) of assets in European ETFs are in Irish domiciled ETFs, with Luxembourg (16%), Germany (3%) and France (2%) making up the bulk of the remaining European ETF market. 

Europe’s ETF market has room for significant growth to realise its full potential.  Of the segments earmarked for growth, the focus on individual/retail investors marks the most significant shift in a sector that’s still dominated by institutional investment. Nearly three-quarters (74%) expect major growth in the retail investor segment over the next two to three years. Drivers of this expansion include the growing popularity of digital distribution and ETF savings plans.  

In addition, 53% of European respondents expect to see significant demand for active ETFs over the next two to three years.

Marie Coady, PwC Global Leader for ETFs, commented: “ETFs are fast becoming the investment funds of choice as asset and wealth managers seek to develop innovative products capable of appealing to an increasingly diverse and demanding array of investors, now and into the future.” 

“At the same time, mounting competition is heightening the pressure on existing ETF managers to diversify offerings.  ETF fees tend to be lower than mutual funds and one of the key challenges for managers is how to sustain margins. Competition highlights the need for innovation, including diversifying products into high yielding asset classes and developing cost-efficient operating models. Failure to keep pace risks missing out on ETFs’ breakthrough growth potential and losing key investor mandates to competitors.”

Regulatory shifts spur surge in innovation

The report highlights how recent regulatory developments are accelerating innovation in the ETF market, with growing diversification into active, alternative and digital investments at the fore. Moves by the US Securities and Exchange Commission (SEC), the Central Bank of Ireland and the Luxembourg Regulator in 2024 and 2025 are facilitating this innovation. 

Active ETFs showing significant potential 

By the end of 2024, active ETF AuM had grown by 52% to reach US$1.03 trillion globally. 65% of survey respondents expect this global active AUM to reach US$3 trillion or above by 2029. In Europe, the surge in demand for active ETFs is reflected in a record year in 2024 for inflows (US$19.7 billion). The proportion of respondents in the regions who see significant demand for active ETFs over the next two to three years are as follows: US (89%), Canada (67%), Europe (53%) and Asia-Pacific (42%). 

Promising prospects for crypto growth 

One in three survey respondents plan to launch crypto/digital asset ETFs as soon as regulations allow. The report highlights that product launches for cryptos are gathering pace in the US as regulatory barriers are removed. Market access varies significantly by region, with the continued restrictions in the EU contrasting with regulatory easing in the US and Canada. 

Disruptive tech will boost market reach

The report highlights that AI, blockchain and other technologies could make ETFs more accessible and affordable to a broader range of investors. Digital capabilities are essential for tailored solutions and cost reduction. Tokenisation has the potential to be a game-changer to extend global reach and lower investment thresholds. According to the survey, roboadvisors, online platforms and apps came out on top when asked about the tech advances that are likely to have the most impact on the ETF sector. These were closely followed by artificial intelligence (AI) and machine learning.

At the same time, the survey highlights particular challenges in accessing broker-dealer platforms. Offering products through investment apps, neo broker platforms and other digital channels could ease some of the distribution bottleneck. According to the report, the leading digital platforms not only offer a wide choice of ETFs, but also low and no-cost trading and gamified visualisations to aid investment choice. 

Marie Coady concluded: “The importance of digital capabilities can only grow as ETF managers look to offer increasingly tailored solutions, while reducing costs across today’s ever more complex and diversified portfolios. The direction of travel is further underlined in the findings from our global asset and wealth management revolution 2024 report: more than seven-out-of-ten global asset and wealth managers taking part (72%) believe that disruptive tech will lead to a shift in customer preferences towards tech-enabled solutions.”