Exchange-traded funds are growing at a rate of 30% each year, and make up roughly 10% of the average Generation X/Y investment portfolio, says TD Ameritrade.

All generational groups have higher ETF balances today versus six months ago, but they are proving most popular with Gen X/Y investors, who came of age along with ETFs. TD Ameritrade said, citing its client data.

"Retail investors are really embracing the exposure to more specialized markets that ETFs can provide," said Mike McGrath, director of ETFs at TD Ameritrade. "We're seeing more investors, young and old, using ETFs in increasingly sophisticated ways."

TD Ameritrade says their clients are using ETFs to move in and out of different markets, responding to market conditions where they see opportunities. The firm said ETF holdings in U.S. stocks represented 47% of all ETF positions 18 months ago, while today that share is 51%. Holdings of commodities ETFs have also risen over that time from 11% to 14%, while international stock ETF holdings decreased over that period from 18% to 17%. Taxable bonds decreased from 11% to 10% and alternative investment ETFs decreased from 12% to 7%.