Rise of ETFs defended from doomsayers

This study, which draws on interviews with more than 70 ETF providers, market makers and service providers and is supplemented by EY's own analysis and knowledge, covers firms which manage 85 per cent of global ETF assets, across the US, Europe and Asia.

It suggested 67 per cent of those questioned believe the ETF market will grow to the point where most firms will have an ETF product offering in the near future.

"We believe global ETF assets could reach $7.6trn (£5.7trn) by the end of 2020, underpinned by the shift to passive, the size of ETFs relative to the overall market and the suitability of ETFs for digital distribution," the report stated.

In his criticism of ETFs, Mr Plowden said investors and advisers are ignorant of what the ETFs they are buying invest in, which he believes could lead to a liquidity problem for the assets similar to that which hit collateralised debt obligations (CDOs) and other complex derivative products in 2007, prompting the financial crisis.

Mr Buxton has also in the past criticised passive investments for what he says is their act of distributing the capital to those companies that already have most, at the expense of the smaller, more dynamic businesses.