A useful tool to open up the market

But the IFA admits he is wary of the vast amounts of cash piling into certain areas of the market, potentially building a bubble. “This hasn't been tested before, and like anything new, it is the unforeseen consequences that can be most problematic.”

Dan Draper, head of Lyxor ETFs for the UK and Ireland, dismisses Mr Merricks' concerns. “The ETF is as liquid as the underlying index it tracks,” he says. “In terms of creating bubbles – all we are doing is offering access to the markets, not promoting them. Perhaps as they are funds that trade like shares, they will promote day-trading, but that is why it is better to use them through a professional.”

The UK tops Europe for net sales into actively managed funds – but over the year, the industry took just €14m. Second was Belgium, which saw a little more than €2m flow into the sector. Mr Draper claims it is times like these that have seen ETFs surge ahead in popularity.

“When you have particularly poor performance in active funds, people become very fee conscious,” he says. “We saw the same thing in the US. When markets sold off, actively managed funds struggled, and ETFs became more popular.

Catherine Neilan is news editor at Investment Adviser