When exchange-traded funds burst onto the scene in the 1990s, they promised to disrupt the lucrative world of funds management by making their products more transparent and accessible. With almost $US10 trillion ($14.7 trillion) invested in ETFs around the world at the end of last year (of which about $A130 billion was contributed by Australia), it would be fair to say they have made some progress.

But now, like any good innovation, ETFs have a target on their back and the disruptor may become the disrupted. An emerging investing strategy known as “direct indexing” combines the flexibility of traditional DIY stock picking with the ease and diversification of ETFs, presenting an alternative to both.