Morningstar analyst Dan Culloton has a review of last year's ramped-up activity in ETF investing. Culloton's 'what was hot' section we already graphed out here (domestic) and here (international). Other excerpts:
There were... signs that ETFs finally had injected some much needed price competition into the fund industry, as Fidelity Investments cut the expense ratios of its traditional index funds and Vanguard lowered the fees for some of its funds' exchange-traded share classes... ETFs also continued to make good on their promise to deliver tax-efficient equity exposure to shareholders. Most of the funds avoided capital gains distributions in 2005...
Judging from the frenetic pace of ETF launches we saw in 2005, its safe to say investors will see a fair amount of trend hopping. For example, there were five new dividend focused ETFs launched in 2005 and Barclays, State Street Global Advisors, and PowerShares all rolled out or planned to roll out more thinly sliced ETFs tracking hot areas, such as homebuilding or the oil and gas industries.