ETF Market size is set to grow by USD 13.12 billion from 2024-2028, market liquidity boost the market- Technavio

NEW YORK, Jan. 28, 2025 /PRNewswire/ -- The global ETFmarket size is estimated to grow by USD 13.12 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 17.61% during the forecast period. market liquidity is driving market growth, with a trend towards growth of bond etfs However, transaction risks poses a challenge.Key market players include Allianz SE, Amundi Austria GmbH, Betterment LLC, BlackRock Inc., Blackstone Inc, FMR LLC, Invesco Ltd., JPMorgan Chase and Co., Mirae Asset Securities Co. Ltd., Morgan Stanley, Morningstar Inc., State Street Corp., The Bank of New York Mellon Corp., The Charles Schwab Corp., The Goldman Sachs Group Inc., The Vanguard Group Inc., UBS Group AG, and Wealthfront Corp..

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Market Driver

Exchange Traded Funds, or ETFs, have become a popular investment choice for both retail and institutional investors due to their affordability and transaction cost efficiency. ETFs are exchange-traded products that operate like individual stocks but track an index, bond, commodity, currency, or other asset class. In the face of market volatility, ETFs offer financial market stability and passive investment strategies through Index funds and Index mutual funds. Government support and technological advancements, including blockchain, artificial intelligence, and big data, have boosted the ETF market. Physical ETFs, such as those based on bonds, equity, real estate, and commodities, have gained traction. Alternative trading funds and computer-built ETFs have also emerged, offering niche investment opportunities. ETFs are listed on stock exchanges, with major players like Black Rock, State Street, Invesco, and Vanguard leading the market. ETFs come in various forms, including Equity ETFs, Fixed Income ETFs, Real Estate ETFs, Commodity ETFs, Currency ETFs, and more. Assets under Management (AUM) have grown significantly, with the Tokyo Stock Exchange's Topix ETF being a notable example. Service providers, financial institutions, and fintech organizations have entered the ETF market, offering investment accounting, contingency Net Asset Value (NAV) solutions, and trade finance services. Small businesses and international trade have also benefited from ETFs, enabling foreign investments and trade agreements. Despite the COVID-19 pandemic, the ETF market continues to scale and secure, offering investors a diverse range of investment opportunities. 

Bond Exchange-Traded Funds (ETFs) offer significant growth potential for investors due to their efficiency in facilitating large transactions and providing access to a diverse range of bonds from various countries. Institutions find it challenging to acquire individual bonds, leading them to prefer bond ETFs. The cost of trading individual bonds from over 50 countries can be up to 65 times more expensive than bond ETFs, as per BlackRock Inc. This factor is likely to attract more investors towards bond ETFs, contributing to the market's expansion during the forecast period. 

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Market Challenges

• Exchange Traded Funds, or ETFs, are a type of investment fund traded on stock exchanges like individual stocks. They provide affordability and lower transaction costs compared to traditional mutual funds. However, ETFs face challenges like market volatility, which can impact Net Asset Value. Index funds and passive investment strategies are popular ETF choices, but government support for Physical ETFs ensures financial market stability. Alternative trading funds, computer-built ETFs, and those tracking bonds, equity, commodity, currency, specialty sectors, and indices, cater to retail and institutional investors. ETFs face hurdles in areas like scalability, security, and investment accounting. Service providers like Just Invest, FundGuard, and others offer solutions. The COVID-19 pandemic and international trade tensions have affected ETFs, with implications for trade finance and sellers, banks, financial institutions, and fintech organizations. ETFs like Equity ETF, Fixed Income ETF, Real Estate ETF, Commodity ETF, Currency ETF, and Topix have varying Assets under Management. Key players include Black Rock, State Street, Invesco, and Vanguard Group. Blockchain, artificial intelligence, big data, OCR, and machine learning are transforming ETFs.
• Corporations conducting business across borders face transaction risks when engaging in financial deals or maintaining records in currencies other than their home base. For instance, a Canadian corporation operating in China encounters foreign exchange risks due to transactions in Chinese yuan and financial reporting in Canadian dollars. The time gap between a transaction and its settlement serves as the foundation for these risks, as currency rates may fluctuate during this interval.

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Segment Overview 

This etf market report extensively covers market segmentation by

1. Type 
• 1.1 Fixed income ETF
• 1.2 Equity ETF
• 1.3 Commodity ETF
• 1.4 Real estate ETF
• 1.5 Others
2. Geography 
• 2.1 North America
• 2.2 Europe
• 2.3 APAC
• 2.4 South America
• 2.5 Middle East and Africa

1.1 Fixed income ETF- The fixed income Exchange-Traded Fund (ETF) sector is currently leading the market, with this type of bond fund investing in various fixed-income securities, including corporate, municipal, and treasury bonds, on a stock exchange. Unlike most corporate bonds, which are sold through bond brokers, fixed income ETFs offer investors greater exposure to the stock exchange. Major vendors in this segment, such as BlackRock, Inc. And The Vanguard Group, Inc., provide treasury bond ETFs, corporate bond ETFs, and aggregate bond ETFs. Fixed income ETFs offer a fixed return on a set time frame, similar to fixed deposits in banks, making them an attractive alternative for new buyers. However, the segment faces challenges, including credit risk, inflation, and interest rate fluctuations. Credit risk arises when a bond issuer fails to pay the required amount on time, leading to financial losses. Inflation and changing interest rates can also impact bond yields, causing price declines for fixed income ETFs and potentially discouraging investor interest.

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Research Analysis

Exchange Traded Funds, or ETFs, are exchange-traded investment funds that operate on stock exchanges, combining the benefits of mutual funds and traditional stocks. ETFs allow investors to buy and sell shares just like stocks, offering greater affordability and flexibility than mutual funds with lower transaction costs. The Net Asset Value (NAV) of an ETF is calculated based on the value of its underlying assets, providing transparency and accuracy. ETFs come in various forms, including index funds, which track a specific market index, and passive investment strategies. Government support and financial market stability have contributed to the growth of ETFs, which now cover a wide range of asset classes such as bonds, equity, commodity, currency, real estate, and specialty sectors. ETFs cater to both retail and institutional investors, offering alternatives to traditional mutual funds and active investment strategies. With computer-built ETFs and specialized offerings like Fixed Income, Real Estate, Commodity, and Currency ETFs, investors have more opportunities to diversify their portfolios and manage risk in today's volatile financial markets.

Market Research Overview

Exchange Traded Funds (ETFs) are investment funds that trade on stock exchanges as exchange-traded products. They offer investors affordability, flexibility, and transparency by allowing them to buy and sell shares like stocks, while providing the diversification benefits of an index fund or a portfolio of securities. ETFs can be based on various asset classes, including bonds, equity, commodities, currencies, and specialty indices. Market volatility can impact ETFs, but their passive investment strategies help mitigate risks. Government support and financial market stability are crucial for their growth. ETFs come in different forms, such as Physical ETFs, Alternative Trading Funds, and Computer-built ETFs. ETFs are accessible to retail and institutional investors, as well as small businesses and financial institutions. The COVID-19 pandemic has accelerated the adoption of ETFs due to their affordability and lower transaction costs. The ETF market utilizes advanced technologies like blockchain, artificial intelligence, big data, and optical character recognition to enhance trade finance, investment accounting, and contingency Net Asset Value (NAV) solutions. ETFs are traded on securities markets, with major players like Topix, Tokyo Stock Exchange, BlackRock, State Street, Invesco, and Vanguard Group leading the market. Scalability, security, and innovation are key factors driving the growth of the ETF industry. ETFs come in various types, including Equity ETFs, Fixed Income ETFs, Real Estate ETFs, Commodity ETFs, Currency ETFs, and more, with Assets under Management (AUM) totaling trillions of dollars. ETFs provide investors with a cost-effective and efficient way to access various asset classes and markets.

Table of Contents:

1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation

• Type
• Fixed Income ETF
• Equity ETF
• Commodity ETF
• Real Estate ETF
• Others
• Geography
• North America
• Europe
• APAC
• South America
• Middle East And Africa

7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Company Landscape
11 Company Analysis
12 Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

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SOURCE Technavio