The growth in indexed products for exchange traded funds (ETFs) is a result of the immense success and popularity of these investment tools. Other reasons ETFs are doing well are broad diversification, low expense ratios, high tax efficiency, trading flexibility, and performance.

Barclay’s was the first to create the index strategy in 1971 and has since become the biggest ETF sponsor with 125 funds. State Street Global Advisors was the first to develop an ETF, the SPDRs (SPY), but they did not continue on to take the lead. However, it is still one of the top ETF giants and manages about one-fourth of all ETF assets. The rest of the market is split between about a dozen firms, from Vanguard and Fidelity to PowerShares, clarifies Zoe Van Schyndel in The Motley Fool. 

Originally, institutional investors and traders used ETFs but now individual investors and financial advisors view ETFs as long term investment alternatives.