The mutual fund industry’s tough decade has paved the way for exchange traded funds (ETFs).

Ten years ago, mutual funds were looking swell: more than 130 of them posted returns of 100% or more at the end of 1999, reports David Hoffman for Investment News. Just six did that in 1998, and zero did it in 1997. So, you can see how the industry began to think it could do no wrong.

But the events that followed put chinks in the armor: the technology bubble burst in 2000 and supposed “can’t lose” funds actually lost big. Another pothole was hit when then-New York Attorney General Eliot Spitzer said he found evidence of illegal trading schemes that were hurting mutual fund shareholders.

The industry has managed to remain scandal-free since 2003, but is it too late? Many investors no doubt became disillusioned with the mutual fund industry when all was said and done.

And is it any coincidence that since 2003, ETFs have taken off like a rocket? At the end of 2003, there were 119 products with $150.98 billion in assets. Today, the U.S. ETF market now has 683 ETFs and $612 billion in assets.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.