ETFs: A Move Coming for '08?

You can't spell "GREAT FUTURE" without "ETF," and a great future is what Tom Lydon thinks is in store for exchange-traded funds.

"The biggest thing we're going to see at the end of the year is, ETFs will, at one point, be playing a major role in the 401k plans,' the editor of ETtrends.com told CNBC. "It's not at this point, but it will happen."

Despite last week's reversals of fortune, the short market has been thriving this year. ("Short" trades are bets that the value of a certain investment will go down).

"The top 20 are almost predominantly short ETFs," Lydon said. "The winner so far this year is the ProShares Ultrashort Semiconductor ETF, up almost 38 percent year-to-date." (See his entire interview here).

Among more conventional ETFs, agriculture is, well, growing.

"The ProShares Agriculture DBF is up about 12 percent year-to-date,' he said. "As emerging market folks have more money, their diets are improving; there's a greater demand for soybeans, sugar, wheat, corn, and this ETF has futures in all those areas."

Individual investors have been slow to get aboard the ETF bandwagon, but Lydon says that's changing.

"Actually, most of the money going in is through institutions, hedge funds," he said.