Closed-end funds are facing unexpected levels of competition from the fast-growing exchange-traded fund industry, not to mention the growing likelihood of an actively managed ETF appearing within the next few years, The Wall Street Journal reports.

Closed-end fund providers for years enjoyed the security of offering the only group of diversified and actively managed investments that trade openly on stock exchanges. But some industry executives are growing nervous as investors discover the same flexibility and added benefits in ETFs. Things could get worse for the closed-end fund if the American Stock Exchange makes good on a promise to roll out actively managed ETFs.

Concerns have prompted closed-end fund industry officials to undertake aggressive forms of housekeeping, such as persistent price discounts, to make their products even more appealing to investors.

The $202 billion closed-end fund industry, which offers 642 investments, barely commands more assets than the rapidly growing emerging $190.5 concentrated in 149 ETFs.

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