ETF Market to Grow by USD 17.94 Billion from 2025-2029, Boosted by Market Liquidity, Report on Market Evolution Powered by AI - Technavio

NEW YORK, Feb. 11, 2025 /PRNewswire/ -- Report on how AI is driving market transformation - The global ETF market size is estimated to grow by USD 17.94 billion from 2025-2029, according to Technavio. The market is estimated to grow at a CAGR of 20.2% 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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Key Market Trends Fueling Growth

Exchange-traded funds, or ETFs, have become a popular investment choice for individuals and institutions due to their affordability and transaction costs. ETFs are exchange-traded products that function like an investment fund, tracking various indices, bonds, equities, commodities, currencies, or specialty markets. The market for ETFs has seen significant growth, with retail and institutional investors alike turning to passive investment strategies like index funds and ETFs. The COVID-19 pandemic has accelerated this trend, with many seeking financial market stability. ETFs offer net asset value pricing, making them attractive during market volatility. Government support and the rise of fintech organizations have also contributed to the growth of ETFs. ETFs come in various forms, including physical ETFs and alternative trading funds. Some are computer-built using big data, artificial intelligence, and machine learning. ETFs can be traded on stock exchanges, with major players like Black Rock, State Street, Invesco, and Vanguard leading the market. Assets under management in the ETF industry continue to grow, reaching trillions of dollars. ETFs offer scalability, security, and investment accounting solutions like FundGuard and Just Invest. The ETF market caters to various sectors, including bonds, equities, real estate, and commodities, on exchanges like the Tokyo Stock Exchange. Trade finance, sellers, banks, financial institutions, and service providers are also part of the ETF ecosystem. ETFs facilitate international trade and foreign investments, with trade agreements playing a crucial role in their growth. The future of ETFs looks promising, with advancements in blockchain, optical character recognition, and other technologies set to revolutionize the industry. 

Bond Exchange-Traded Funds (ETFs) offer significant growth potential for investors due to their ease of use and cost efficiency compared to trading individual bonds. Institutions find it challenging to access multiple international bonds directly, leading them to prefer bond ETFs for large transactions. These funds facilitate efficient trading of securities that would otherwise be difficult and expensive to access individually. According to BlackRock Inc., the cost of trading individual bonds from over 50 countries can be up to 65 times more expensive than bond ETFs. Consequently, the increasing interest from investors is expected to fuel the growth of the bond ETF market 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, market volatility poses challenges. Net Asset Value (NAV) may not align with market price in real-time for Index funds and Passive investment strategies. Government support, Physical ETFs, and Alternative Trading Funds offer stability. ETFs cover various assets like bonds, equity, commodity, currency, and specialty sectors. Retail and institutional investors benefit, with giants like Black Rock, State Street, Invesco, and Vanguard leading the market. ETFs face scalability and security concerns. Technology trends, such as Blockchain, Artificial Intelligence, Big Data, and Optical Character Recognition, aim to address these challenges. Trade finance, sellers, banks, financial institutions, and service providers are leveraging ETFs. Small businesses and international trade also benefit from foreign investments. COVID-19 pandemic impacts ETF markets, with Passive investing strategies and Index mutual funds adapting. ETFs on Tokyo Stock Exchange manage Assets under Management (AuM) worth trillions. ETFs include Equity ETF, Fixed Income ETF, Real Estate ETF, Commodity ETF, Currency ETF, and more.
• Corporations conducting business across international borders face transaction risks during financial transactions and record keeping. For instance, a Canadian company operating in China deals with Chinese yuan in transactions and reports financial statements in Canadian dollars. The time gap between a transaction and its settlement exposes corporations to currency rate fluctuations, which is the essence of transaction risks. These risks can impact a corporation's financial performance, making it crucial for businesses to manage and mitigate them effectively.

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Segment Overview

This etf market report extensively covers market segmentation by

• Type
• Fixed Income ETF
• Equity ETF
• Commodity ETF
• Real Estate ETF
• Others
• Product Type
• Large Cap ETFs
• Mega Cap ETFs
• Mid Cap ETFs
• Small Cap ETFs
• Geography
• North America
• Europe
• APAC
• South America
• Middle East And Africa

1.1 Fixed income ETF- The fixed income Exchange-Traded Fund (ETF) sector holds a significant position in the current market landscape. Fixed income ETFs function as bond funds investing in various fixed-income securities, including corporate, municipal, and treasury bonds. Unlike most corporate bonds sold through bond brokers, fixed income ETFs operate on centralized stock exchanges, providing extensive exposure to the stock market for bond buyers. Major vendors such as BlackRock, Inc. And The Vanguard Group, Inc., offer treasury bond ETFs, corporate bond ETFs, and aggregate bond ETFs. Fixed income ETFs provide a consistent return on a predetermined time frame, similar to fixed deposits in banks. This feature attracts new investors to explore the stock exchange by shifting from fixed deposits to fixed income securities. However, the segment faces challenges, including credit risks, inflation, and interest rate fluctuations. Credit risk arises when a bond issuer fails to pay the due amount on time, potentially leading to financial losses. Inflation and interest rate changes can also impact bond yields, causing the price of fixed income ETFs to decline as interest rates rise on the stock exchange. These factors may hinder the growth of the fixed income ETF market during the forecast period.

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Research Analysis

Exchange-traded funds (ETFs) are exchange-traded products that function like individual stocks, but represent a basket of stocks, bonds, commodities, currencies, or a combination of these assets based on an index or a specific investment strategy. ETFs provide investors with affordable access to various markets and asset classes, making them an attractive alternative to traditional mutual funds. Their market value is determined by the net asset value (NAV) of their underlying assets, and they offer lower transaction costs due to their intraday trading. ETFs can be categorized into various types, including index funds, passive investment strategies, physical ETFs, alternative trading funds, and computer-built ETFs. These include Fixed Income ETFs, Real Estate ETFs, Commodity ETFs, Currency ETFs, and more. ETFs can be suitable for both retail and institutional investors, providing financial market stability and flexibility in managing risk and diversifying portfolios. Market volatility and government support play crucial roles in the ETF market. ETFs can help investors navigate market fluctuations by offering exposure to a broad range of assets, while government support can impact their regulatory environment and overall market sentiment. ETFs can be traded on various stock exchanges, providing investors with the convenience of buying and selling them throughout the trading day.

Market Research Overview

Exchange Traded Funds (ETFs) are investment funds that trade on stock exchanges as exchange-traded products. They offer affordability, lower transaction costs, and access to various asset classes such as bonds, equity, commodities, currencies, and specialty indices. ETFs track an underlying index, making them ideal for passive investment strategies. Government support, financial market stability, and the use of technology like blockchain, artificial intelligence, and big data have boosted their popularity. ETFs come in different forms, including Physical ETFs, Alternative Trading Funds, and Computer-built ETFs. They cater to retail and institutional investors, individuals and small businesses, and offer various classes like Equity, Fixed Income, Real Estate, and Commodity ETFs. Market volatility during the COVID-19 pandemic has highlighted the importance of ETFs in securities markets, with players like Topix, Assets under Management, and ETFs (ETFs) providing contingency Net Asset Value solutions. Service providers, financial institutions, and fintech organizations play crucial roles in the ETF ecosystem, ensuring scalability, security, and investment accounting. Sellers, including banks, facilitate transactions, while trade finance and trade agreements impact international trade and foreign investments. Overall, ETFs offer investors a cost-effective, diversified, and flexible investment solution.

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
• Product Type
• Large Cap ETFs
• Mega Cap ETFs
• Mid Cap ETFs
• Small Cap ETFs
• 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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