ETF buying is on pace to break last year’s record based on inflows during the first four months of 2013 as smaller funds get more attention from investors.

The U.S. ETF business is famously top-heavy with the so-called Big Three of BlackRock’s (NYSE: BLK) iShares, State Street Global Advisors (NYSE: STT) and Vanguard together accounting for more than 80% of the assets under management. [State Street ETF Market Share Slips]

However, other ETF providers such as WisomTree Investments (NasdaqGM: WETF) are coming on strong to challenge the largest companies. [Smaller, New ETF Providers Try to Chip Away]

In general, it’s tough for smaller firms to compete against the established ETFs that track broad, well-known stock and bond indices. Some of the most-successful new ETFs target market niches such as bank loans and dividend stocks. And providers are also hitting pay dirt with complex ETFs that mimic specialized or active strategies.

For example, WisdomTree Japan Hedged Equity (NYSEArca: DXJ) is the best-selling ETF this year with inflows of about $5.6 billion. The fund invests in Japanese stocks but hedges its currency exposure to the yen. [WisdomTree Shares Rally on Higher Profit, ETF Flows]

Next page: Spreading the ETF wealth

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