How long can mutual funds hold back the rising tide of exchange traded funds (ETFs)?

Now that actively managed ETFs are closer to reality, Kevin Burke for Ignites says that mutual fund companies are going to find ETFs much more difficult to ignore than before. In fact, the industry’s largest trade group, the Investment Company Institute, formed a permanent ETF committee. It’s another sign that ETFs are encroaching on mutual fund turf.

Some companies have joined forces with ETF providers: Invesco bought PowerShares in 2006. Dreyfus entered a co-branding partnership with WisdomTree. An anonymous Merrill Lynch branch manager says a lot of their advisors are using them "in a big way."

But other companies are standing firm: American Funds is said to not be likely to make a move into ETFs anytime soon.

A survey by Cogent revealed that 95% of advisors say they’d be interested in selling actively managed ETFs. But 47% of advisors say they will never sell ETFs, a number that’s attributed to a large number of aging advisors who may be resistant to change.

It remains to be seen if mutual funds will embrace actively managed ETFs, and advisors are keeping an eye on the asking price as well as methods of disclosure. If they catch on, it could set off a sea change in the industry.