Pacific Investment Management (PIMCO) has announced its plan to launch five actively managed ETFs to compete with rivals like State Street ( STT) and PowerShares.

So far, the actively managed ETF space has been all talk and no game. While compelling arguments exist as to why these funds should be such a roaring success, this is new and uncertain territory for the industry. The role of ETFs is changing, and the fund companies are now testing already-claimed territory.

The seedlings of the ETF industry grew in and around the massive roots of mutual fund giants. The nimble new products could do things that their mutual fund peers could not: offer transparency, tax advantages and liquidity through major exchanges. ETF patches also gained strength in the sunlight not stolen by the massive trees above -- areas of the market like commodities that were previously not accessible through mutual funds.

This small forest carpet, however, is beginning to grow strength, and more robust strains of the ETF flora may begin to sap energy from the host. In the past decade, the ETF industry has surged 10-fold to more than $500 billion. ETFs like S&P 500 Depository Receipts ( SPY) and Financial Sector Select SPDR ( XLF) see millions of shares trade hands per day. As they eye any and all profitable portions of the market, the big names now want a piece of the action.

While retail investors were early adopters of ETFs and institutional investors continued to embrace mutual funds (or separate account management), the line has begun to become blurred. In a recent article in Trader, Knight Equity Markets, a giant market-maker, copped to seeing a "tidal wave of volume and liquidity in the ETF space." What makes this influx of volume different, however, is that it represents "the rise of a new ETF customer base: traditional asset managers."

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