I love the phrase "ETF pollution." People are crafting too many ETFs for exotic strategies, and some ETFs are simply designed to be short-lived. For ETF operators, it is becoming a casino of whose strategy will be most favored by the market for longer.

"What I am seeing is a rapid shift from ETF evolution to ETF pollution," said Richard Ferri, chief executive at Portfolio Solutions LLC, a Troy, Mich., investment adviser that uses ETFs for its clients.

This proliferation could backfire, financial advisers warn, especially if stock prices take a break from their hot run. The ETF industry then could face consolidation and products dropping off the vine for lack of assets and trading volume.

"ETF closings could come as the [fund's] investment philosophy loses its shine after a market pullback," said Herb Morgan, president of advisory firm Efficient Market Advisors LLC. "It will be no different than the traditional fund business, with smaller poor-performing funds being merged away or closed."

ETFs are mutual-fund-like investments that track an index and trade on exchanges like individual stocks. Their assets in the U.S. increased by 38% last year to $417 billion, with 156 new offerings bringing the total number of funds to 359, according to State Street Global Advisors.

Analysts and financial advisers singled out a few types of ETFs they think might be at greatest risk of not surviving a protracted downturn. Among them would be those with smaller coffers, perhaps less than $50 million, a few years after their launch and managed by firms with asset bases too small to subsidize lagging funds. Thin trading volume could also be another potential warning sign, as well as ETFs tracking similar areas of the market where one family is the clear leader on assets and trading volume.

Morgan Stanley analyst Paul Mazzilli also questioned the viability of "far-reaching, thematic" and highly specific ETFs such as Claymore/Clear Spin-Off ETF that invests in publicly traded companies that were once units of larger corporations. Introduced in late 2006, it has about $26.5 million in assets.