Jack Brennan, chairman emeritus of The Vanguard Group, known for its low-cost index funds, recently echoed a common sentiment when he described actively managed ETFs as an oxymoron.

“One of the reasons you index is to take manager risk out of the equation. To put manager risk back into the equation makes no sense to me,” Brennan said at IndexUniverse’s InsideETFs conference in February.

Most people think of ETFs as vehicles built to track indexes passively, and for good reason. To date, that’s what 96 percent of them do. Even when passively managed ETFs follow reweighted or customized indexes, once the index’s rules have been established, the securities selection process is computer-driven and emotionless.

But with big-name fund sponsors like Fidelity and T. Rowe Price lining up at the Securities and Exchange Commission to get into the active space, this may be the year when the actively managed ETF segment finally takes off. Some regulatory hurdles have been cleared, including a moratorium on the use of derivatives, but others remain, such as concerns over front-running.

“The index licensing grab has largely played out,” says Luke Montgomery, an analyst at New York–based Sanford C. Bernstein & Co. As a result, he adds, “many ETF providers view active ETFs as an important new frontier for industry growth.”

Currently, there are 1,445 ETFs in the U.S. Just 58 of them, or 4 percent, are actively managed, and they hold less than 1 percent of the industry’s assets — 0.86 percent, to be precise — or $12.6 billion out of $1.46 trillion, Morningstar says. Of that total, $7 billion is concentrated in two successful fixed-income ETFs from Pacific Investment Management Co.: Total Return ETF (BOND), launched last February, with $4.3 billion in assets, and Enhanced Short Maturity ETF (MINT), introduced in 2009, with $2.7 billion in assets.

So why should the time be right for the launch of more actively managed ETFs?

If actively managed ETFs can outperform their index-based counterparts, they could be of great interest to both individual and institutional investors. In fact, actively managed ETFs might be the next killer app. Compared to mutual funds, ETFs have the advantage of being publicly traded and they have a lower fee structure.

State Street Global Advisors launched its first three actively managed ETFs in April of last year and filed for six more on December 27. According to Jim Ross, the senior managing director at State Street and the head of the asset manager’s ETFs, “We see a strong future for active ETFs” — maybe not immediately, but as a “long-term trend.” Some strategies now in wide use among mutual funds can be ported over to the ETF side only if the ETF is actively managed, for instance, balanced strategies that combine stocks and bonds, he notes. State Street is “still exploring opportunities for passive ETFs,” he says. “We think there’s still room for growth there; we don’t think of it as an either/or proposition.”