A classic moment in American cinema comes courtesy of the “Godfather II” when Hyman Roth says to Michael Corleone, “Michael, we’re bigger than U.S. Steel.

The exchange traded funds industry is having such a moment. According to ETFGI, a London-based ETF research firm, the global exchange traded products industry will surpass hedge funds in terms of assets under management this quarter.

“According to our analysis published on April 24th, assets in the global ETF/ETP industry reached a new record of US$2.926 trillion at the end of Q1 2015, while assets in the global hedge fund industry, according to a new report published by Hedge Fund Research (HFR), reached a record US$2.939 trillion. Assets in the ETF/ETP industry have been gaining on those invested in the hedge fund industry with the difference narrowing from US$230 billion at the end of 2013 to just US$13 billion at the end of Q1 2015,” according to a note published by ETFGI on Monday.

“Global ETFs gathered $36.1 billion in March to lift Q1 flows to $97.2 billion, nearly triple the total from Q1 2014.  Investors put $71 billion into non-U.S. developed equities in the first three months of the year, making it the strongest first quarter on record.  Currency hedged ETFs saw inflows of $26.8 billion in Q1 as investors looked to hedge their international equity exposure due to a stronger dollar,” according to BlackRock, parent company of iShares, the world’s largest ETF issuer. [ETFs add $36.1B in March]

While hedge funds remain popular with select institutional investors, ETFs are getting their fair share of institutional money and that share is expected to grow.

A recent survey conducted by Invesco’s (NYSE: IVZ) PowerShares unit, the fourth-largest U.S. ETF issuer, and Market Strategies International, shows that use of smart beta ETFs by professional investors continues climbing.

Sixty-four percent of institutional usage of smart beta ETFs is currently concentrated to dividend funds, a number that is expected to rise to 67% over the next three years, according to PowerShares. Over the same period, institutional usage of fundamentally weighted ETFs is forecast to rise to 68% from 61% while professional adoption of low volatility is expected to surge to 71% from 57% today. [Business is Booming for Smart Beta ETFs]

“With the positive performance of equity markets many investors have been happy with index returns and fees. This situation has benefited ETFs/ETPs, which offer an enormous tool box of index exposures to various markets and asset classes, including hedge fund indices and some active and Smart Beta exposures,” according to ETFGI.