As more people, along with fund giants, turn away from traditional mutual funds, exchange traded funds (ETFs) are enjoying a new found popularity amongst open-minded investors who are looking for a better way to invest.

In a survey by Ignites, the majority of respondents found ETFs to be the top competitive threat to managed mutual funds, writes Gregory Shulas for Ignites.

ETFs saw net inflows of $182 billion in 2008 whereas mutual funds experienced outflows of $203 billion, but it should still be noted that actively managed mutual funds have a considerably larger volume of total assets.

While ETFs had inflows, their assets under management still dropped from $507 billion as of January 2009, compared to $625 billion in 2007.

The decline in assets is attributed to investments flowing into passive and index products, but fund manufacturers adapted to this trend by providing new bond, inverse and leveraged ETFs.

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.