The ETF industry saw a number of notable changes in 2015, including the rise of smart beta, more fee slashing, a spotlight on robo-advisors and a new milestone for growth when global exchange-traded fund assets reached $3 trillion in May. Here are some of the major ETF trends to watch in 2016:

The ETF juggernaut goes on. On a percentage basis, ETFs have been growing faster than mutual funds for years. That might be expected when comparing a relatively new industry to a mature one. 

But a new milestone was reached in the first quarter of 2015, when actual dollar growth in ETF assets sold through retail distribution channels exceeded mutual fund growth for the first time ever, according to Broadridge Financial Solutions. The vast majority of ETF asset growth has come from RIAs, independent broker-dealers, wirehouses and discount broker-dealers, according to Frank Polefrone, senior vice president of Broadridge’s Access Data products.

“We’ve seen a broad trend shift as more and more financial advisors use ETFs in lieu of mutual funds and individual securities,” says Polefrone. “This has been especially pronounced in the last year to 18 months.” He attributes the migration to ETFs to increased use of assets under management (AUM) fees over commissions, as well as greater awareness of index investing on the part of financial advisors and cost-consciousness among consumers. 

Most ETF growth has occurred since 2008 over a long, comparatively sedate bull market. But Broadridge data showed that over the year ending September 30, 2015, a period marked by substantial market volatility, ETF assets grew by $144 billion, or 7.4%. That growth was driven largely by retail channels. During the same period long-term mutual fund assets from third-party distributors declined by 2%, or $156 billion. 

“ETF assets continued year-on-year growth through the third quarter, despite the worst stock market drop since 2008, with advisors accounting for the lion’s share of investment,” says Polefrone. “The movement to ETFs and away from mutual funds is a big structural change, not just a fad.”

An opening for actively managed bond ETFs. Most actively managed ETFs are in the fixed-income category, but these newcomers still make up just a small fraction of the bond ETF universe. Because most of them are so new, they really haven’t had a chance to show their merit against bond indexes. 

But that could change if rates rise next year. Because of their market-cap weighting, most indexed bond ETFs are stuffed with U.S. Treasurys, which are highly sensitive to interest rate fluctuation. In theory, at least, actively managed funds should be able to adjust better to rising rates because they have a smaller percentage of assets in Treasurys and higher allocations to less rate-sensitive areas of the fixed-income universe, such as high-yield corporate and emerging market debt. They can also adjust portfolio durations to be longer or shorter than the indexes.

The giant in the space, the $2.7 billion PIMCO Total Return Active Bond fund (BOND), recently celebrated its three-year anniversary. This was the ETF that demonstrated the fatal flaw of funds with marquee manager names when it lost hundreds of millions of dollars soon after famed manager Bill Gross left PIMCO in September 2014. Nonetheless, its longer-term record is fairly impressive. Over the three years that ended September 30, its average annual return was 2.5% while the performance of the iShares Core Aggregate U.S. Bond (AGG), which follows the Barclays U.S. Aggregate Bond index, was 1.6%. The fact that BOND outperformed by nearly 1 percentage point annually, despite having an expense ratio 47 basis points higher than AGG’s, may convince investors that expenses are just one part of choosing an ETF.

The star power gap at PIMCO couldn’t have come at a better time for the SPDR DoubleLine Total Return Tactical ETF (TOTL), another actively managed offering. Launched in early 2015 the ETF, managed by bond guru Jeffrey Gundlach, holds some $1.6 billion in assets. Following on that success, State Street Global Advisors filed with the SEC later in the year for two more ETFs, also to be managed by DoubleLine Capital. 

Target-date bond ETFs, another non-traditional product, could also gain popularity as interest rates rise. Because these ETFs target a specific maturity date, investors can use them to manage duration through the construction of bond ladders, much as they would with individual securities. Guggenheim and iShares have a full suite of target-date bond ETFs. 

Cost pressure for smart beta. Faced with increasing competition, some ETF providers are promoting the potential for better returns through rules-based indexing strategies other than weighting by market capitalization, the traditional ranking gauge. According to Morningstar, there were 844 of these “smart beta” or “strategic beta” products as of late September, up from 673 in 2014, and the assets they manage grew from $396 billion to $497 billion over the period. 

While there is substantial debate about whether smart beta works better in practice than traditional indexing, the added expense associated with non-traditional approaches is clear. Smart beta ETFs that track large-cap U.S. stocks typically have expense ratios of around 50 basis points—significantly lower than actively managed mutual funds but much higher than comparable market-cap-weighted products. 

But the expense gap between smart beta and traditional market-cap-weighted products could begin to narrow in 2016 as established players enter the market and more competition among smart beta products puts pressure on fees. In mid-September, Goldman Sachs changed the playing field when it launched its ActiveBeta U.S. Large Cap Equity ETF (GSLC). With an expense ratio (after fee waiver) of 9 basis points, it trounces the smart beta competition when it comes to cost. Goldman has several other ETF products in the filing process with the SEC. 

“If the Goldman Sachs smart beta ETF launches prove successful, it would add price pressure for smart beta products,” says Edward Lopez, marketing director at Van Eck Global, which sponsors the Market Vectors ETFs. “The bigger question is how well these ETFs will be able to differentiate themselves from each other and from traditional market-cap-weighted products that already have low costs built in.”

Slow progress in the 401(k) market. Although exchange-traded funds have become more popular, growth has been slow in the 401(k) market for a number of reasons. Many larger plan sponsors already have access to low-cost institutional shares and index mutual funds, narrowing or even eliminating the cost advantage of ETF-only accounts. And the tax efficiency of ETFs is irrelevant in tax-deferred accounts. 

There are also operational issues. “Most companies have systems and record-keeping platforms that are not set up for ETFs, and they usually have index mutual funds available anyway, says Polefrone. “So ETFs are not cracking the 401(k) market in a big way. We might see some progress in 2016, but there are still a lot of operational issues companies need to address.” Nonetheless, Polefrone sees financial advisors making inroads into the small- to micro-plan markets populated by companies with fewer than 100 employees. 

This market is vastly underserved—only about 14% of small employers sponsor some type of plan for their employees to save for retirement, according to the General Accounting Office. Many of these employers cite fees associated with record-keeping and products such as annuities as deterrents to starting a savings plan. Those concerns are justified, since small businesses with under $1 million in plan assets pay retirement plan costs as much as five times higher than plans with over $1 billion.

Recently, ETFs began emerging as a centerpiece for low-cost 401(k) options that cater to the small business crowd. In September, Betterment became the first of the so-called robo-advisors to announce an ETF-only 401(k). Slated for launch in early 2016, Betterment for Business will have fees of 60 basis points for the advisory service, plus an additional 10 basis points for internal ETF charges, for accounts of less than $10 million. 

More respect for millennials. Baby boomers were the generation that ushered in a new era for mutual funds, and their children are taking up the investing torch with ETFs. According to Schwab’s “2015 ETF Investor Study,” 66% of millennials aged 25 to 35 have between 25% and 100% of their investable assets in ETFs. Those numbers fall to 30% for Gen Xers, 16% for boomers and 17% for matures. In five years, millennials expect to have a mean average of 41.7% of their investments in ETFs, nearly twice as much as their baby boomer parents. 

Even though millennials are open to ETF investing, the vast majority of financial advisors who use them haven’t rolled out the welcome mat, preferring instead to focus on more profitable older investors with a higher level of investable assets. And while some are using robo-advisor platforms to attract and service a new demographic with shallower pockets, others view these automated systems as flawed competition.

Perhaps in an effort to soften the battle lines and keep the millennial momentum going, ETF powerhouse State Street weighed in on the topic in a recent report titled “Embracing Change as Opportunity.” In it, the firm noted that robo-advisor platforms “can add efficiency to your practice, increasing your profitability and possibly even more importantly, helping you economically serve clients who may have limited assets today but over time will have more dollars and more complex planning needs.”