Deloitte: ETFs To Challenge Mutual Funds

by on September 24, 2009

Deloitte Research recently released a study examining the rapid rise of the ETF industry, its future prospects, and, of course, the relationship between ETFs and actively-managed mutual funds going forward.

Some of the highlights from the study:

  • In a survey of investment professionals, 67% called ETFs the most innovative investment vehicle of the last 20 years
  • In the same survey, 60% or respondents reported that ETFs have fundamentally changed the way they construct portfolios
  • Mutual funds are expected to decline 10% in a typical portfolio product mix, with most of this allocation going to ETFs

Deloitte also makes some interesting predictions for the future of the ETF industry, anticipating that these products will continue to increase in popularity as SEC rule changes make it easier to create new ETFs. The paper also predicts that ETF assets in 401(k) plans will increase significantly in the next five years as efforts to break through into these plans gains momentum.

While none of the predictions in this paper are particularly earth-shattering, it provides an excellent overview of the ETF structure, creation and redemption processes, and comparisons to other popular investment vehicles. If you’re a financial advisor, this piece is a must read.

See the whole report here: [pdf]