Skyrocketing popularity often comes at the price of sharp scrutiny, as the fast-growing exchange traded funds (ETF) industry is learning. With the number and variety of ETFs rapidly increasing, and total assets under management at an all-time high, ETFs have earned an extra level of scrutiny from regulators globally. Regulators appear to be committed to making sure that safeguards exist for accurately identifying and communicating risks and costs, as well as ensuring up-to-date compliance practices for ETFs.
Whether such directives dampen growth and innovation—or steer funds toward new opportunities—may depend on how well ETF sponsors manage risks and disclosures while also accommodating changing distribution technologies and new investment products.
An increasing number of ETF sponsors will explore geographic markets outside of their home territories, according to a recent PwC study. The survey, which drew global responses from more than 65 ETF managers, sponsors and service providers, asked respondents where they plan to expand, and which regulatory and tax obstacles they anticipate encountering.
This paper leverages the results of our ETF global survey and includes our insights on how regulations and taxes will impact the ETF industry.
Whether in search of institutional or retail investors, ETF firms are increasingly seeking to grow their global footprint well beyond their home markets. Based on our survey results, North American (86%), Europe (88%) and Asia & Oceania (70%) participants expect to launch ETFs outside of their home markets over the next two years (see chart). These survey results are consistent with the discussions we have had and continue to have with many asset managers who recognize that the growth opportunities for ETFs are significant across the globe.
ETF Services Leader, PwC US
Global ETF Practice Leader, Global Financial Services Innovation Center, PwC US
Thomas J. Holly
Asset and Wealth Management Leader, PwC US
Mutual Funds Leader, PwC US