ETFs have firmly established themselves as one of the defining investment vehicles of modern markets. Year after year, we see continued growth in assets, product innovation and investor adoption across regions. What was once largely an institutional tool is now moving decisively into the mainstream, driven by a powerful combination of cost efficiency, transparency and diversification.
These themes were at the heart of our recent webinar, Smarter ETF Access: Unlocking Investment Potential, where I was joined by Darren Fancourt, Head of Operations at 7IM; Henri Boua, ETF Advisory & Execution at HSBC; Scott Atkinson from Vanguard; and Calastone’s Ben Carew-Gibbs. Together, we explored not only why ETFs continue to grow, but what needs to change to ensure that growth translates into better outcomes for investors.
Because while the ETF story has been one of remarkable expansion, the next stage of its development is increasingly defined by how easily investors can access and use these products in practice.
From structural growth to mainstream adoption
The drivers behind ETF growth are well understood. As Scott Atkinson outlined, ETFs offer a compelling proposition: low-cost market access, daily transparency of holdings, and efficient diversification through a single trade. These characteristics have resonated strongly with investors navigating increasingly complex markets.
From a distribution perspective, Darren Fancourt highlighted just how quickly this shift is materialising. ETF trading has moved from a marginal share of activity to a meaningful proportion of overall platform volumes in recent years, reflecting growing adoption within model portfolios and discretionary strategies.
This is not happening in isolation. Regulatory developments such as Consumer Duty in the UK, alongside broader policy initiatives designed to encourage investment over cash savings, are accelerating the trend. ETFs sit squarely in that “sweet spot” of simple, scalable and cost-efficient investment solutions.
At the same time, innovation continues to expand the opportunity set. As Henri Boua noted, the breadth of ETF exposures now available, from active strategies to fixed income and thematic products, is attracting a wider and more diverse investor base. Liquidity has also improved significantly, with tighter spreads and deeper trading volumes enhancing the investor experience.
In short, the foundations for continued ETF growth are firmly in place.
The real challenge: bridging the gap between demand and access
Where the conversation becomes more nuanced is in how ETFs are delivered to end investors.
Despite strong demand, ETF adoption within certain channels, particularly advised and platform-based distribution, remains below its potential. The reasons are not product-related, but structural.
As we discussed during the webinar, fragmentation across platforms, inconsistent trading models and legacy infrastructure all create friction. For model portfolio providers operating across multiple platforms, differing ETF capabilities and cost structures can act as a significant barrier to adoption.
This reflects a broader issue: ETFs are still predominantly accessed through trading models designed for equities, rather than investment models designed for long-term saving.
That distinction matters.
Traditional fund infrastructure allows for aggregation of orders, regular savings and fractional investment. ETFs, by contrast, are often treated as individual trades, introducing higher costs, operational complexity and limitations for smaller or more frequent investments.
The result is a mismatch between how investors want to use ETFs and how the market currently enables them to do so.
The role of fractionalisation and regular investing
One of the clearest examples of this gap is fractionalisation.
As Darren Fancourt and others highlighted, the inability to trade ETFs fractionally creates inefficiencies for both investors and portfolio managers. Smaller portfolios can suffer from cash drag, while regular savings models become harder to implement effectively.
This is particularly relevant as the investor base evolves. Younger, digitally native investors are increasingly engaging with markets through regular, smaller contributions rather than large lump sums. Supporting these behaviours is essential if ETFs are to fulfil their potential as a mass-market investment vehicle.
Fractional ETF trading is therefore a fundamental enabler of broader participation.
Rethinking distribution through the secondary market
Alongside fractionalisation, the role of the secondary market is becoming increasingly important in shaping ETF distribution.
Today, many platforms rely on traditional broker-based execution, which can introduce explicit trading costs, best execution challenges and operational complexity. This model does not always align well with the needs of long-term investors or platforms managing high volumes of smaller transactions.
What is emerging instead is a more integrated approach, one that leverages secondary market order routing in a more efficient and scalable way.
By aggregating orders and routing them through a standardised network, ETFs can be accessed in a way that more closely resembles traditional funds. This reduces costs, simplifies connectivity and enables platforms to incorporate ETFs seamlessly into existing workflows.
For platforms and pension providers, this has significant implications. It enables them to offer ETFs alongside mutual funds without the need for complex new infrastructure, while also supporting behaviours such as portfolio rebalancing and regular savings at scale.
In effect, it helps bridge the gap between trading and investing.
Education: an ongoing industry responsibility
Of course, infrastructure alone is not the full story.
As several panellists noted, there remains a clear need for continued education, particularly within the advised space. Awareness of ETFs among retail investors and even some advisors remains relatively low, despite the growth of the market.
Encouragingly, this is beginning to change. Digital channels and new forms of engagement are bringing ETFs to the attention of younger investors, many of whom are entering the market for the first time through these products.
But for ETFs to achieve truly broad adoption, education must go hand in hand with improved access.
Looking ahead: from availability to usability
A consistent theme throughout our discussion was that the next phase of ETF development will be shaped by how effectively the industry can translate availability into usability.
The industry has done an exceptional job of building a diverse, liquid and cost-efficient product set. The next challenge is ensuring that these products can be used in the ways investors increasingly expect.
Encouragingly, the direction of travel is clear. Continued improvements in efficiency and infrastructure will play a critical role in driving the next wave of adoption.
From a broader perspective, the alignment of regulatory support, technological innovation and changing investor behaviour suggests that the conditions are in place for a significant step forward.
A turning point for ETF access
The ETF industry stands at an inflection point.
Growth is strong. Demand is expanding across new demographics. And the case for ETFs as a core building block in portfolios is firmly established.
What remains is to remove the remaining barriers between investors and those outcomes.
As we concluded in the webinar, the opportunity is not simply to make ETFs available, but to ensure they are genuinely accessible, flexible and cost-efficient at scale.
If we can achieve that, the next chapter of the ETF story will not just be about growth, but about inclusion.
