Boston, April 2, 2013 – A new report from Aite Group examines the evolving U.S. exchange-traded fund industry on its 20th birthday. Based on Aite Group interviews with senior executives at leading industry issuers and on 2009, 2011, 2012, and 2013 online Aite Group surveys of financial advisors and investors, the report examines growth drivers past and present and considers the trajectory of ETFs as driven by asset managers and young investors.

In only 20 years, U.S. ETFs have grown from their humble beginnings of US$464 million in assets to more than US$1.3 trillion, enjoying double-digit growth along the way. ETF assets still remain in the shadows of mutual funds, but ETF flows are beginning to rival those of their well-entrenched brethren. Growth has been driven by retail and institutional investors and less by financial advisors in recent years--financial advisors have kept the allocation of client assets to ETFs steady, at 7% to 8%. Drivers such as actively managed ETFs, educational efforts, generational change, and the migration of brokerage assets to fee-based platforms will grow the advisor channel; as asset managers and distributors seek to translate mind share into market share, the number of drivers ensures that the ETF market will continue on its healthy growth trajectory.

“Managers and distributors must tailor educational messaging to individual advisors,” says Sophie Schmitt, senior analyst with Aite Group and co-author of this report. “Before they can embrace the product, advisors want to know how a manager's ETFs will benefit their clients as compared with mutual funds.”

This 31-page Impact Report contains 17 figures. Clients of Aite Group’s Wealth Management service can download the report.