The Next $10 Trillion: Why ETF Assets Could Double By 2030
Assets in the industry could double by the end of the decade, according to one expert.
U.S. ETF assets just crossed $10 trillion, but if you ask David Abner, global head of ETFs & funds at Northern Trust Asset Management, that number could double in the not-too-distant future.
“I think the ETF industry is hitting escape velocity,” Abner said at the Exchange conference in Las Vegas, speaking with Todd Rosenbluth, head of research at VettaFi. “We’ve been talking about hitting the hockey stick moment for five or seven years ... but I think last year was really it.”
From $10 Trillion to $20 Trillion
With over $1 trillion in net inflows and more than 700 new ETFs launching in 2024 alone, the momentum is undeniable. Abner believes that trajectory is accelerating, not slowing.
“We’re at $10 trillion now,” he said. “It took us about 30 years to get here, and we’ve had a 19% CAGR over that time. I think we’re speeding up, not slowing down.”
He continued: “Even if you stay at 18% [growth], that gets us to $20 trillion in five years.”
Where will that next wave of assets come from? Abner pointed to deep institutional adoption: “Insurance companies, 401(k) plans, 529 plans ... all of the solutions for those things are coming. ETFs are beating institutional pricing that [those clients] used to get directly from asset managers. That’s a massive change.”
Fixed Income: The Next Growth Engine
Much of the conversation focused on fixed-income ETFs, which have seen record inflows and are finally getting their due.
“I think fixed income is sort of way underweight as a category in ETFs,” Abner said. “The bond market is four or five times the size of the equity market, and ETFs are the reverse.”
He believes we’re at the start of a major rebalancing: “This is it. This is like the beginning of the fixed-income era in ETFs. And 20 years from now, we’re going to look back and fixed income is going to be huge.”
Historically, one barrier has been concerns over bond ETF liquidity—but Abner pushed back hard.
“Volume in ETFs does not equal liquidity in ETFs,” he said. “That’s probably the biggest mistake in the industry, and it happens constantly.”
He described ETF liquidity as a three-layer pyramid:
- Underlying basket liquidity: “How much of the underlying assets can I trade?”
- Related derivatives: “Things I can trade that look like the ETF, like S&P futures for the SPDR S&P 500 ETF Trust (SPY).”
- Risk portfolio hedging: “Market makers are constantly offsetting risk across thousands of ETFs. That adds liquidity, even if they’re not trading the exact underlying.”
Because of this system, Abner said, “Market makers want to trade. Every time they add risk, that’s where they make money. They love providing large-size liquidity—even in ETFs with low volume—because it feeds their risk book.”
Crypto, Tokenization and Active ETFs
Although Northern Trust doesn’t currently offer crypto ETFs, it has a growing presence.
“We are pretty deeply involved in the digital assets ecosystem,” Abner said. “We’ve got people thinking about custody, crypto and tokenization of assets. Tokenization is going to be the next evolution of trading vehicles.”
He likened it to the transition from stock certificates to digital ledgers: “Tokenization will help firms run leaner, cut infrastructure costs and maintain margins.”
When the conversation turned to active ETFs, Abner made a point to clarify industry misconceptions.
“There’s no structural difference between an active ETF and a passive ETF. It just depends on what you declare in the prospectus,” he said.
That flexibility, he added, is powering innovation: “Buffer ETFs, options-oriented ETFs, fixed income ETFs ... all of that gets issued as active because it’s easier to manage without the handcuffs of a benchmark.”
Innovation on the Indexing Side
While much of the recent buzz has been around active, Abner noted that indexing isn’t standing still either.
“Smart beta has been around forever,” he said, “But now you’re seeing new iterations—double factor funds, things like quality and low vol together. Our FlexShares US Quality Low Volatility Index Fund (QLV) is an example of that.”
He also highlighted the divide between large and small issuers. “The top 25 [to] 30 firms are full portfolio providers. But the other 250 are playing in the satellite space. That’s where a lot of innovation is happening.”
ETF Share Classes on the Horizon
On the topic of ETF share classes, Abner confirmed Northern Trust has filed to offer them and said momentum is building.
“The [lawyers at the conference] were more bullish than I expected,” he said. “One said second quarter, another said fourth. I emailed my team and said, ‘We need to be ready.’”
He added: “We’ve had share classes in Europe for years. We’ve had them here for decades. This isn’t new.”
What Could Slow It All Down?
To close the session, Rosenbluth asked the natural question: What could derail the ETF industry’s momentum? Abner’s answer was classic ETF industry optimism.
“A market downturn could actually be great,” he said. “It frees up capital and puts money in motion. People come back [to the market] through ETFs.”
In other words, whether the next $10 trillion arrives in a bull market or a bear market, Abner believes it’s coming either way.
