Finally, are active bond ETFs better than bond index ETFs?
Unlike in the equity fund world where active fund managers had hard time beating index funds over the long run, there are a number of active bond fund managers who have produced consistently superior returns for bond investors. As the article shows, as of March 31, 2007, “38 out of 331 distinct funds in the intermediate-term bond-fund category have produced 10-year returns that top the Aggregate Bond Index’s gain.” Thus, investing in passive bond ETFs may not give investors the returns they are looking for as compared to investing in actively managed bond mutual funds, even in the long term. After making the above arguments, the article concludes that All in all, we still think there can be a place for ETFs — and most other cheap, tax-efficient funds — in investors’ portfolios. And truly sophisticated investors may get some benefits from trading ETFs intraday or short-selling them. But given the strengths of traditional bond mutual funds, we continue to think that they serve most inves
