NEW YORK ( TheStreet) -- The size and scope of ETFs is growing rapidly, as the adaptable funds take aim at an even broader audience. Among the top most-active symbols in the market today are ETFs like the Financial Select SPDR ( XLF), SPDR Trust ( SPY) and iShares MSCI Emerging Markets Index ( EEM), evidence that these funds have taken more than a foothold.

Originally touted as "mutual fund alternatives," it has now become clear that ETFs stand on their own and have aim beyond the mutual fund industry. The success of individual country funds like Market Vectors Russia ( RSX) and fixed income products like iShares iBoxx $ Invest Grade Corp Bond ( LQD), illustrate the range of the ETF product line.

While some funds, like the Vanguard Value ETF ( VTV) and the iShares Russell 3000 Value Index ( IWW), don't seem like a far shot from their mutual fund peers, commodities and bond offerings seem to be aiming at strategies that mutual funds can't.

Due to their structure, ETFs can provide daily trading strategies, like Direxion's Daily Financial Bull ( FAS), to sophisticated investors, while offering physically backed gold funds, like SPDR Gold Shares ( GLD), that can be traded intraday by a broader audience.

Since the funds are seeded by market participants, they have continued to debut on stock exchanges across the globe, even as equity IPOs remain lethargic. A recent article in Barron's realistically notes that the 40% annual asset-growth rate of ETFs over the past 10 years will likely slow to around 20% to 25% over the next three to five years.

Tax efficiency and transparency are among the reasons that investors have flocked to passive exchange-traded products. As investors become increasingly wary of hedge fund managers, these passively indexed products will become even more appealing.

The bread and butter of the ETF industry may be sector plays, but managers would like to reach out to a broader audience. The debut of life-cycle ETFs, fund of fund ETFs and active ETFs are squarely aimed at the longer-term investor.

A two-fold question remains: Will audiences be ready for the new fleet of funds, and will popular existing funds become too big for their britches?

The anemic interest in the new actively managed funds seems to be a sign that it will take time for these funds to catch on. The Dent Tactical ETF ( DENT), a recently launched active fund, has an average daily trading volume of less than 7,000 shares. Investors who are turning to ETFs out of distrust for active managers may find active ETFs hard to swallow.

Concerns over size should not be discounted. New regulation from the Commodities Futures Trading Commission has sent ETFs like United States Natural Gas ( UNG) and PowerShares DB Commodity ( DBC) scurrying to stay within position limits. As these funds grow ever larger, there may be further limitations for futures-based commodity ETFs.

Despite the setbacks that have challenged the relatively new industry, it seems as though we are directly situated in an ETF boom. As ETFs continue to grow, and attempt to be everything to every investor, the evolution will be remarkable to watch.

-- Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion had no positions in companies mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.