Sector ETFs Put Heat on Select Funds

Select mutual funds also will continue to dominate their ETF counterparts so long as they have the power of advertising and name recognition on their sides, Tjornehoj says. Being perceived as a dependable product that delivers returns is a huge part of the battle for investors.

"A company like Fidelity won't just do away with select mutual funds, and they won't slip away," says Tjornehoj. "They can advertise and to go advisors and get their products in front of them. ETFs, with their skinny expense ratios, don't have a whole lot of services behind them."

Sweeney also notes that the added value of actively managed funds could justify higher fees. "There's a lot of demand for these [select] funds, and when it's all said and done, we deliver a lot and are competitively priced."

Frankle, though, maintains his belief that select-fund market share will continue to drop as ETFs attract more investors.

"It's only a matter of time before there are ETFs out there that mirror the performance of select funds, and then it's bye-bye select," says Frankle. "Or mutual funds will get smart and make products that are more like ETFs, meaning they will get rid of the short-term redemption fees.