Firms Continue to Evaluate Active Equity, Thematic and Sustainable, and Cryptocurrency Offerings
February 2, 2022 — Boston
A lack of regulatory clarity complicates strategy decisions and stifles innovation
This issue of The Cerulli Edge—U.S. Monthly Product Trends analyzes mutual fund and exchange-traded fund (ETF) product trends as of December 2021, explores the paths firms are taking to launch new ETF offerings, and evaluates the outlook of the mutual fund structure.
Highlights from this research:
- Total mutual fund ($20.8 trillion) and ETF ($7.2 trillion) assets experienced significant growth during 2021, as the former witnessed 14.4% growth while that latter increased nearly 32%. ETFs were particularly aided by net flows as the vehicle gathered just more than $900 billion during the year—equal to approximately 4.9% organic growth.
- As active ETFs pique the attention of issuers, it is not clear which path toward offering active equity ETFs will win out. The dual-share-class structure used by Vanguard has tremendous potential if it receives greater regulatory support. Sustainable ETFs remain a difficult sell to advisors, but Cerulli perceives opportunity in bridging communication gaps, offering impact products, and showcasing how sustainability benefits performance. Cryptocurrency ETFs can offer investors a means to access the exposures safely and responsibly, but they require regulatory approval.
- Over the five years ending 2021, the total number of mutual funds, excluding closed-end funds and money market funds, has decreased by more than 800, or 10% of fund strategies. Cerulli expects trends in mutual fund consolidation to continue as other investment vehicles take priority in asset manager product development efforts, particularly among active products. In addition, mergers and acquisitions among asset managers looking to offset effects of fee pressure and competition through synergistic business consolidations will combine pools of investor capital into lower numbers of funds.
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