The ETF market will hit $50 trillion by 2030, Bank of America says

Carmen Reinicke

December 13, 2019 9:34 PM

Assets in exchange-traded funds are poised to hit $50 trillion by 2030, according to a note from Bank of America released Wednesday.

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The ETF market is already seeing a growth rate of 25% that will bring the total market to $5.3 trillion in assets at the end of 2020, Bank of America said.
Investors such as Michael Burry and Howard Marks have disparaged passive investing, which leans heavily on ETFs. Still, ETFs are gaining because of tax efficiency, cost, liquidity, and transparency, according to the report.
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In the next decade, the size of the exchange-traded fund market will see explosive growth, according to Bank of America.

In 2030, the ETF market will hit $50 trillion in assets, "driven by a continued move to passive and increased awareness of the attractive tax efficiency, cost, liquidity and transparency characteristics of ETFs," Bank of America analysts led by Mary Ann Bartels wrote in a note Wednesday.

The ETF market is already seeing a growth rate of 25% that will bring the total market to $5.3 trillion in assets at the end of 2020, according to Bank of America. That means that over the next year, $1 trillion will pour into the popular investment vehicle, which is a basket of securities that trades on an exchange like a stock.

baml Bank of America

In 2020, a "relatively constructive" market view will fuel ETF asset growth, as well as stable interest rates and tightening credit spreads, the note said.

"Fixed income ETF flows will continue to punch above their weight," Bartels wrote. In addition, she predicts that fee pressures will continue and that thematic ETFs will see strong growth.

ETFs are a pillar of passive investing, which investors such as Howard Marks, Jeffrey Gundlach, and Michael Burry have called out as a "bubble" in the market that could prove to be dangerous.

Still, passive investing has grown because of the ease and benefits it offers investors, according to Bank of America. Over the last decade, total assets in ETFs ballooned from $770 billion to $4.3 trillion.

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