Recent figures from the BlackRock ETP Landscape report for May 2016 shows there are more than 6,000 exchange traded products (ETPs) available with more than $3.1trn (£2.2trn) in assets.

Meanwhile, statistics from the Investment Association show that at the end of April 2016 tracker products had amassed £109.2bn in funds under management, accounting for 10.7 per cent of total industry funds under management, up from 9.6 per cent in April 2015.

So what is driving this popularity? Uncertainty in stockmarkets, caused by a number of global macroeconomic and geopolitical issues, could be one factor, while cost continues to be key for many investors and their advisers.

But the evolution of the industry towards ‘enhanced index’ funds, smart beta and fundamentally weighted indices that can be tracked by passive products are all making a passive approach more attractive.

Howie Li, executive director, and co-head of ETF Securities’ Canvas platform, says: “With respect to inflows, passive investing continues to gather pace as the scrutiny on performance versus costs remains a focal point.

“Passive investing is, therefore, proving popular because it is reducing the portfolio costs for the end client where the fees on certain active funds were not justified.”

He adds that with index-hugging funds under the spotlight, “the due diligence that advisers and fund managers carry out has highlighted how passive investment can make up the core of their portfolio”.

“This not only reduces the cost of the portfolio but it also means that more time can be freed up to identify opportunities. These opportunities may include high-conviction concentrated active funds, thematic investments and other tactical allocations.”

Simon Klein, head of ETP sales for Europe and Asia at Deutsche Asset Management, agrees there is demand for low-cost ‘core’ investments on major equity benchmarks.

In addition, he points out: “We’re seeing more investors starting to use fixed income ETFs – this is also a big focus for product development. Fixed income ETFs provide a standardised way to invest in bonds with the tradability and transparency benefits of an exchange-traded instrument. Also, the hunt for yield is still key.”

In future, he believes the passive industry will see more strategic beta developments. “Strategic beta is a hot topic, especially in the fixed income space. It lets investors not have to weight towards the biggest – and, therefore, the most indebted – issuers.”

Developments in this area have seen Stoxx, the operator of Deutsche Boerse Group’s index business, extend its Select and Diversification Select index families to combine themes such as environmental, social and governance with low-volatility, high-dividend and low-correlation screens, creating hybrid index concepts that can be tracked by structured products and ETFs.

This month, Invesco PowerShares launched two high-dividend and low-volatility ETFs, while Wisdom Tree is the latest to launch two quality dividend growth ETFs.

Looking ahead, Mr Li says: “The landscape in five years’ time will be an efficient set of core-tracking ETFs and precision investing tools that are higher in conviction and/or target specific themes or trends.”

With more index providers creating specialised indices for investors to track, the future of the passive investing industry looks anything but boring.

Nyree Stewart is features editor at Investment Adviser