Exchange traded funds (ETFs): Understanding the future opportunities and challenges

Since their introduction only two decades ago, ETFs have been undeniably popular. Growing far beyond their initial function of tracking large liquid indices in developed markets, ETFs now hold over $2.6 trillion of assets globally. ETFs are listed on an ever growing number of exchanges and are being used by investors in a growing number of markets. New investor segments continue to integrate ETFs into their portfolios and fund sponsors continue to introduce new products.

The proliferation of ETFs was identified in our AM 2020 publication as one of the six game changers in the asset management (AM) industry. ETFs are no longer a niche product, and their impact will continue to be felt much more widely than imagined. As such, all financial services firms should consider developing an ETF strategy. This may be an obvious choice for firms planning to manage, service, or distribute ETFs, but it is also important for firms that will be competing in an environment that is increasingly shaped by ETFs.

• Seamless integration of our audit, tax and advisory services
• Accounting, tax and regulatory advice
• Specific agreed-upon procedures reviews of controls and processes surrounding the ETFs control environment
• Deep tax knowledge and experience addressing unique tax positions and structural issues facing ETFs

• Significant experience evaluating ETF product structuring considerations, including tax, back-office, accounting and reporting matters
• Evaluating tax compliance considerations for ETF products and management companies
• Advising ETF service providers in the design and development of ETF-specific processing capabilities and their impacts on people, processes and technology requirements.