James Ross, global head of ETFs at State Street Global Advisors, noted he's seen greater willingness by investors to look at active ETFs. "Many clients use ETFs to implement active strategies," he said. "The question is do they want to take on active risk in that model?"
Ross cited a McKinsey report that forecasted that the active ETF market will grow to $500 billion by 2020. (They currently comprise just a tiny portion of the overall $1.3 trillion U.S. ETF market.)
"That's their number, not mine," Ross said. "But I'm not sure I disagree with that."
No matter how the active versus passive question plays out, the panelists are excited about the industry's future prospects. Mark Wiedman, BlackRock managing director and global head of its iShares ETF business, said about $14 trillion is parked in active mutual funds. He added that these funds, along with single-security holdings and derivatives, are the ETF industry's biggest competition. He believes there's plenty of upside for ETFs—both in the U.S. and globally.
"We're so far away from this industry reaching maturity," Wiedman said. "I think over the next five to 10 years we'll see consistent growth in this category because there are still a lof of retail and institutional investors who don't use ETFs."