1. The Next Trillion Dollars:
HOW TO LAUNCH AN ETF
The Next Trillion Dollars:
An In-Depth Look at the ETF Market of Tomorrow
NIGEL BRASHAW
Partner
PwC

2. The Next Trillion Dollars: An In-Depth Look at the ETF Market of Tomorrow
22nd January 2017 1 1

3. Partner, PwC Global ETF Leader
Nigel Brashaw
Partner, PwC Global ETF Leader
Boston, MA

4. What will we be covering this afternoon?
WHERE HAVE WE COME FROM? (VERY BRIEFLY)
WHERE ARE WE NOW? (BRIEFLY)
WHERE ARE WE GOING? .
OTHER TOPICS & QUESTIONS .

5. Where are we coming from? Where are we now?
Source: Strategic Insight MF
Note: Data includes ETFs, ETNs & UITs

6. Progress in Trillion Dollar Increments
2014
TODAY
201?

7. The next $1 trillion prediction – Our View
ETF AUM
$3.6T in 2018

8. Where will the next trillion dollars be invested?- The boring answer
“Smart Beta” AUM $513bn
Non “Smart Beta” AUM - $2.0T
Source: Morningstar
Active AUM not shown – c$25bn approximately 95% of which is in active bond funds.

9. Structural Factors Driving Growth
We see 4 key developments driving continued growth in assets under managment
ONLINE PLATFORMS
We believe the technology is here to stay and will improve. Key impact will be at incumbent organizations.
RETAIL INVESTORS
Representing approximately 50% of assets in ETFs individual investors are an important group who increase their adoption of ETFs over time.
INSURANCE COMPANIES & OTHER INSTITUTIONS
Insurance companies are users and will increasingly be issuers of ETF products.
FINANCIAL ADVISORS & INTERMEDIARIES
Regardless of changes in regulations – the lower fee proposition of ETFs is attractive to financial advisors and likely will remain so.

10. Why are investors buying more and more ETFs?VS

11. What haven't we talked about?
There is a lot of press comment about the following topics:
ACTIVE ETFS
Currently active equity ETFs are at a significant disadvantage to other products – regulatory changes could open up a whole new market to ETFs
LIQUID ALTERNATIVES
There is a lot of media talk about the potential for liquid alternatives – but there remain very few assets
FURTHER PRODUCT INNOVATION
Smart Beta is on the frontier of innovation in the asset management industry (not just ETF’s), what’s next?

12. An interesting question might be: “What role to ETFs play in the future of Asset Management?”
Trend
Good for ETFs
Digitization ✔
Cost/Fee Transparency & Pressure
Shift to Passive
Regulation
? (Probably)
Demographics

13. ETFs and the next $10 trillion dollars - Disruption in Asset Management
DEMOGRAPHICS
Key trends include impact of ‘Baby Boomer’ drawdowns, ‘Millennials’ and the increase in wealth in Asia-pacific
MACRO ECONOMIC CONDITIONS
Volatility is probably not going away for the foreseeable future
NEW BETA PRODUCTS
The average fee for ETFs has decreased 15% since (Morningstar).
REGULATIONS
Regulatory change in the US and elsewhere can provide opportunities as well as impediments
TECHNOLOGY/DIGITAL
How will ETFs capitalize on changes/trends such as Blockchain, artificial intelligence and big data
NEW ENTRANTS
Will new entrants launch products?

14. Nigel Brashaw Assurance Partner – PwC Global ETF Leader Boston, MA
Phone:

15. THANK YOU
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