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Exchange-traded funds have $1.2 trillion in assets in 1,476 funds, which account for nearly one-third of U.S. equity trading. That’s pretty astounding, given the industry didn’t even exist two decades ago. Starting with a single product on the American Stock Exchange in 1993, they picked up steam in the late 1990s, and proceeded to build assets at a rate of more than 30% per year from 2000 to 2010. What started as tradable index funds soon grew more complex, branching into commodities, currencies, derivatives, fixed-income, and more. Then ETFs threw out the indexes altogether by making inroads into active management.

But the growth has been uneven. The ETF industry is exceedingly top-heavy: Three-quarters of ETF assets are managed by the big-three firms of BlackRock, Vanguard Group, and State Street. More than one-third of all assets are held in the 10 biggest funds. And more than half the ETFs on the market today have less than $50 million in assets, putting them in the maybe category as to whether they’re viable products their sponsors will keep around.

To hear industry participants tell it, exchange-traded funds’ explosive growth is only getting started. The rise of index-tracking ETFs will be followed by equally rapid gains via the adoption of actively managed ETFs. This will be accompanied by wider use of ETFs in 401(k) plans and deeper inroads into relatively untapped areas like fixed income. BlackRock’s iShares unit predicted this month that U.S. bond ETFs alone could reach $1.4 trillion in the next decade — bigger than the entire industry today. We think investors are just beginning to realize the potential of fixed-income ETFs, says Matthew Tucker, head of BlackRock’s iShares fixed-income investment strategy.

But the industry optimism may be less than it’s cracked up to be, according to Bernstein Research. Those three big growth areas — active management, 401(k) and other defined-contribution plans, and fixed-income — will be tougher to penetrate than index investing was. Active management presents challenges for managers who don’t want a spotlight on their daily trading. Fixed income isn’t as easy to index, and faces the same challenges and more in the active arena, since most bond funds use derivatives, which are not currently approved for use in ETFs. As for the 401(k) industry? Mutual-fund firms have a tight grip on retirement plans, and may not want to cede those fees to cheaper products. A lack of motivation among incumbents is how the Bernstein analyst Luke Montgomery charitably describes it.