Exchange-traded funds have been a disruptive force within the asset management industry. ETFs have succeeded because they are--in many cases, though not all--a better way to package, distribute, and consume a variety of investment strategies. ETFs tend to be less costly and more tax-efficient versus traditional open-end mutual funds. They are also more widely available (given that they trade on an exchange, like stocks) and more readily accessible (given that investors can buy them in amounts as small as a single share on their own).
ETFs' gains have often come at others' expense. Most notably, many sponsors of traditional actively managed mutual funds have been suffering outflows for years. Some of the factors behind their woes are specific to the strategies they ply. Many active stock-pickers in the large-cap growth Morningstar Category (which has been the epicenter of outflows) have simply failed to deliver. But even many successful funds have hemorrhaged assets.