Exchange-traded funds could turn out to be "the most significant new product category" of the decade, according to Financial Research Corp. of Boston. They will "continue their recent dramatic growth rate for many years to come," according to a recent FRC report. Any fund complex that wants to appeal to a broad investor base should probably add the products to its offerings, the report said.

"Clearly, index-based ETF's are about to break through into the mainstream-investing world," FRC said in its report, "Exchange-Traded Funds: An Emerging Alternative to Mutual Funds." But that does not mean that they will eclipse mutual funds, FRC said.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.