Ever since the boom in retail exchange-traded funds started half a decade ago, the industry has been anticipating the day when someone would crack the nut on making an actively-managed version of the product. So far no one has. But have they slipped the camel's nose under the tent with index ETFs that are so customized they are no longer indexes?

That is the suggestion raised in Friday's Fund Track column in the Wall Street Journal. The paper warns that "your new exchange-traded index fund might just be a plain, old stock-picking mutual fund in disguise."

The article's premise should not come as news to anyone in the fund industry, but it may be important in setting the ground for a shift in how retail investors (and other reporters) view the complicated products. The introduction of actively-managed (or pseudo-actively-managed ETFs) would also open up the field for new players to compete in areas other than cost index brand.

The paper specifically cites PowerShares Capital Management as leading the trend with its introduction of 16 new ETFs, some of which specifically attempt to constrain their benchmark to stocks that are likely to outperform the market. For PowerShares, the new products may be making an end-run around the technical and regulatory issues that have so far stalled the introduction of actively-managed ETFs. It seems all a fund firm must do to be able to offer an pseudo-active ETF is open the kimono on its portfolio holdings and get a rubber stamp from an index creator.

Meanwhile, Vanguard founder John Bogle also makes an appearance in the article and coins the catchy phrase "index nouveau" in an apparent attempt to belittle the term (someone should remind King Jack that it was the nouveau rich that push the country into the future and out of the past).  

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