Investors were an unpredictable lot during 2012, but they at least were consistent in their preferred mode of action.

Exchange-traded funds took in a record amount of new money during the year, surpassing 2008 and sending total assets under management to $1.34 trillion, according to sources that track the industry.

While ETFs remain well behind the $9 trillion or so that the competing mutual fund industry still holds, the gap is clearly narrowing.

"That U.S.-listed exchange traded funds are closing out 2012 with such strong asset-gathering -- at or near a very considerable record -- does engender a whole range of questions over the future of capital markets and especially equities," Nicholas Colas, chief market strategist at CovergEx, said in an industry analysis. "The data is clear: ETFs aren't just here to stay; they are here to conquer."

Based on the $282.6 billion, or 26 percent, increase this year in assets, the industry could double every four or five years. At that rate, it could overtake mutual funds in about 12 years.

(Read More: Why Investors Are Dumping Stock Funds for ETFs)

There are a variety of reasons for the ETF growth.

Because they trade like stocks, ETFs are easier to use than mutual funds, which can be bought or sold only outside of exchange hours. They also generally have lower fees attached.

More broadly, though, the popularity reflects a powerful trend toward passive investing as opposed to active. Market correlations -- or all assets moving together up and down -- have made diversification difficult and indexing an easy way to limit volatility and still capture the 12 percent market gains this year.