The Vanguard Group's decision to issue a new exchange-traded share class on six of its index funds represents a milestone in the evolution of exchange-traded funds and will popularize them with investors interested in short-term trading and fund companies interested in offering them, said mutual fund executives.

"My guess is Vanguard's share class will add more momentum to a trend that was already well established by Standard & Poor's Depository Receipts, World Equity Benchmark Shares and Holding Company Depository Receipts," said Loren Fleckenstein, editor-in-chief of FundMovers.com, a website based in Los Angeles dedicated to mutual fund market timing.

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.