State Street forecasts asset growth of 30 – 40% in 2008 following a growth rate of 45% to $608 billion in 2007. The leading manager continues to be Barclays with assets totaling $329 billion or a market share of 54%.
One of the drivers of ETF asset growth is the increasing number of large funds. According to State Street, there were 92 ETFs with a market capitalization of over $1 billion at the end of 2007, up from 72 at year-end 2006 and just 10 in 2001.
Investor interest will need to pick up significantly for the State Street forecast to become a reality by year end. The WSJ reports that ETF assets declined $12.9 to $557 billion in February.
Despite the recent pull-back in the markets, ETFs still have a bright future. According to State Street:
The core attributes of low costs, transparency, liquidity, and tax efficiency have made ETFs an attractive option for investors.
See the State Street report ETF Industry Review and 2008 Outlook for more information.