Put folks from Vanguard and Invesco PowerShares on the same panel at an industry conference devoted to exchange-traded funds, start discussing the growing role of smart-beta strategies in ETFs, and you’re sure to have a disagreement between these two leading ETF providers.

On Monday at the Inside ETFs conference in Hollywood, Fla., a panel of industry executives brought together to discuss ETF trends inevitably touched on the growing role of smart-beta funds in the space. And inevitably, Vanguard and Invesco had different takes on the benefits of smart beta, a broad term comprising non-market-capitalization-weighted index strategies.

The discussion was amiable, but the overall takeaway is that smart beta-oriented funds have been -- and will continue to be -- a growth driver in the ETF space. That, and other forces, should keep ETF usage on an upward trajectory into the foreseeable future.

Joel Dickson, global head of investment at Vanguard’s investment strategy group, said he sees two major ETF trends shaping up this year. First, he anticipates ETF use will increase due to what he termed the ETF familiarity effect. Namely, a couple of years ago Vanguard's research found investors are three times more likely to choose an ETF over a mutual fund of a similar type if they previously chose an ETF for another investment strategy.

Given the comparatively small numbers of retail investors who’ve invested in ETFs, that smells like a major opportunity for market share gains.

“Less than 10 percent of U.S. households actually hold an ETF today,” Dickson said.

The other major trend Dickson discussed is the ever-blurring lines between active and passive investing. “Passive ETFs are being used to implement active views, and indexes are being constructed to reflect approaches of active managers,” he said. 

That ties into smart beta, which straddles the line between active and passive management. And few ETF providers have embraced smart beta as much as PowerShares, whose fund roster includes 64 equity products and nine fixed-income offerings employing a variety of smart-beta strategies.

Dan Draper, managing director of global ETFs at Invesco PowerShares Capital Management, noted modern portfolio theory was built around traditional indexing, and that was the original focus of the ETF market because that’s where the money was. But now, he posited, investor demand for more targeted active solutions beyond simple market cap-weighted indexing will fuel the growth of smart beta-focused ETFs.

Dickson unequivocally stated Vanguard’s take on smart beta. “We don’t do smart beta,” he said.

In short, Vanguard believes market cap-weighting is the result of buyers and sellers coming together to set the best price for a security. “Active managers say that’s wrong, and that’s how they earn their living,” Dickson said. That's fine, he noted, but he disagrees with marketing that promotes smart beta as a better approach to indexing.

“In some ways it [smart beta] is an evolution over the past three decades . . . of building factor portfolios as a way to deliver different sources of return and risk exposures,” Dickson said. “This innovation is more about rules-based, lower-cost and more targeted exposures, and it’s really more of a threat to high-cost, traditional active managers. From that lens, I figured out what the ‘smart’ in smart beta actually means -- ‘Silly Moniker for Active Rules-Based Trading.’”

Other panelists discussed the huge growth opportunity for ETFs in fixed income. Nick Good, chief operating officer at State Street Global Advisors, said 2014 was a tremendous year for fixed-income ETFs in terms of inflows.

“From my perspective, the most profound impacts have been in non-traditional fixed income -- high-yields, convertibles, senior loans and that kind of thing,” he said, adding that ETFs have opened up a new market for retail investors thanks to their low costs and greater liquidity.

“Most individuals don’t want to pour over individual bonds,” Good said. “They want to make decisions about diversified baskets of bonds. That said, there are still a ton of misconceptions about bond ETFs, and I spend a lot of time with investors talking about fixed income and how they trade and are priced and how they do during times of stress."

Good said two trends should boost the market for fixed-income ETFs: A greater acceptance of non-traditional fixed-income strategies; and the growing number of active fixed-income managers coming into the ETF space, such as DoubleLine.

“There’s still a huge amount of runway, and they [fixed-income ETFs] represent less than 1 percent of the total global fixed-income market,” he continued.

An intriguing coda to the panel discussion dealt with the role robo-advisors, or automated investment programs, will play in the expanded use of ETFs. In short, they’re expected to accelerate ETF adoption because their investment platforms are built around cost-efficient, ETF-based portfolios.