The $2.1 trillion global exchange-traded fund industry has been growing at a rapid clip since theSPDR S&P 500 ETF was launched two decades ago as a means for institutional investors to access passive exposure to the S&P 500 Index.

Over the last 10 years, assets in ETFs have grown over 30% annually, compared to a 5% to 6% growth in mutual funds, according to consulting and research shop McKinsey & Company.

Today, the ETF industry is comprised of institutional and retail investors, as well as passive and increasingly active funds. But what are the next growth opportunities for ETF providers?

"If I look at the pool of capital driving ETF growth, insurance companies are a new avenue for ETF growth," said Kevin Quigg, Global Head of ETF Sales Strategy for State Street Global Advisors.

"Most ETF providers, ourselves included, have gone through with the National Association of Insurance Commissioners the rating process that allows insurance accounts to more easily use ETFs."

Daniel Gamba, head of BlackRock's iShares Americas Institutional Business, echoes Quigg's sentiments. "We're really excited about the growth of fixed income ETFs because they represent 1/10 of the penetration of equity ETFs and considering that recently bond buyers such as insurance companies started to look at buying ETFs," said Gamba.

"They're looking for exposure to corporate and high-yield bonds and the only instrument that is currently working for them from a liquidity perspective is ETFs. Even in this volatile environment, we had our High Yield Corporate Bond Fund (HYG) trade $1 billion per day for five days and you can't even get a fraction of that from traditional high-yield bonds."

Gamba expects U.S. ETF flows this year to be at least as strong as last year, which was the largest inflow year for the industry growing at 12% organically and $210 billion to $215 billion globally. "We're expecting about 12% to 13% organic growth for the industry this year," he said.

Looking further into the future, iShares has a very optimistic view of the U.S. ETF market as a whole. In fact, the firm is predicting that U.S. ETFs will reach $3.5 trillion in assets within the next four years from its current $1.5 trillion. "If you look at the past 10 years, the organic growth rate has been 23% and within the past five years it has been 19% so we feel very comfortable about that $3.5 trillion number," said Gamba.

Overall, there are currently 5,108 funds as of May 31, up from 5,023 funds at the end of 2012, and 4,648 products at the end of 2011, according to SSgA. On the active ETF front, there are now 172 active global ETFs managing some $23 billion in assets.

In the 1990s, ETFs were institutional investment vehicles offering broad exposure to equities, according to Quigg. A decade later, fee-based advisors and intermediaries jumped into the mix and became more prevalent in the product usage. Quigg said that institutions will continue to embrace exchange-traded funds at the margin and, more importantly, at the core of what they do.

Quigg said active ETFs such as his firm's own SPDR Blackstone/GSO Senior Loan ETF, which launched in April, have a bright future. The fund has gathered $290 million since its launch. "Fixed income ETFs are very good for the market because they provide another layer of liquidity in what was traditionally a very illiquid marketplace," he said.

Gamba added that more institutions are using ETFs as a core investment of their portfolio as opposed to using them as liquidity and exposure vehicles, and he expects that to also drive a lot of growth in the industry.

However, Gamba said his firm is not currently focused on active fixed income funds. Rather, iShares is currently focused on growing its minimum volatility ETFs, which are non-cap weighted ETFs. "We've grown our stable of minimum volatility ETFs to $8 billion in less than two years. They're great for this market environment where volatility is very high. We've also seen nice growth in [our] frontier market ETFs," he said.

Data from Cerulli Associates seems to support Quigg's and Gamba's assertions. According to the Boston-based research shop, more than half of ETF sponsors (57%) plan to develop active fixedincome ETFs in 2013. Another 86% plan on developing passive products that are unique to their competitors.

"ETF product development in general slowed in 2012 as 153 new ETFs were launched compared to 229 in 2011," noted Alec Papazian, associate director at Cerulli Associates. "2012 was also a record year for ETF closures as 70 strategies were taken off the market. Developers are becoming naturally more deliberate in their product strategy and are looking to offer products that meet a need in the market, instead of throwing out products and hoping some will stick."

Shawn McNinch, global head of Exchange-Traded Fund Services at Brown Brothers Harriman, which provides custody, administration and transfer agency services in support of its ETFsponsors, said he is also seeing an uptick in active and niche ETFs come to market.

"A lot of our new business development discussions have been around supporting active ETFs as well as enhanced beta products," said McNinch.

"People are taking a cautious approach to this space and I think there is more appetite for fixed income active products for the rest of the year and into next year because there is less concern around transparency and managers are more willing to disclose their holdings. That's the area where I would say has the most growth potential," he added. McNinch also noted that a lot of active large mutual fund managers are now looking at entering the active ETF space.

"Some of them have filed to launch active ETFs and I think you'll see a number of them really start to go into this space," he said.

"Some of them are taking a more cautious approach in launching one or two products to gauge their ability to gather assets and some of them are really looking at the big bang approach by pushing out a eries of active ETF strategies."