The underperformance in active fixed-income funds suggests that investors would have been better off in a passive index-based strategy, such as the SPDR Barclays Long Treasury (NYSEArca: TLO), which tracks the widely observed Barclays Long U.S. Treasury Index. TLO has a duration of 17.4 years and a 2.68% 30-day SEC yield. TLO has dipped 1.6% year-to-date and generated an annualized average 6.1% return over the past five years. The ETF also shows a cheap 0.10% expense ratio.

Investors who are interested in greater diversification may track a bond fund with a range of debt securities, including government exposure and corporate debt. However, among the broader diversified investment-grade debt active category, only 17% of the funds in the investment style outperformed the Barclays Long Government/Credit Index for the year ended June 2015 and only 8% outperformed over the past five-years.

On the other hand, ETF investors can take a look at the Vanguard Long-Term Bond ETF (NYSEArca: BLV), which tracks the Barclays U.S. Long Government/Credit Float Adjusted Index, to exposure to a range of investment-grade government and corporate debt securities. BLV has a 14.7 year duration and a 4.08% 30-day SEC yield. BLV is down 3.1% year-to-date but generated an average annualized return of 6.1% over the past five years. The ETF also comes with a cheap 0.10% expense ratio.

For more information on the fixed-income market, visit our bond ETFs category.

Max Chen contributed to this article.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.