The whole idea of a fixed income ETFs seemed so novel just five years ago. But that has changed with a passion and we may be stepping into a golden era for these ETFs

Investment News notes data that shows passive bond funds won 39 percent of all new funds flowing into bond strategies so far this year, up from 22 percent two years ago. Assets in fixed income ETFs have more than quadrupled since the start of 2008 to $168.3 billion. The number of bond ETFs has soared to more than 160 from 6 just five years ago.

In many ways, the same dynamic is playing out in the bond market that played out in the equities market. End investors are increasingly questioning the value of active management and the associated costs. ETFs offers the right, measured exposure to neatly defined asset classes so much more efficiently. All this becomes a bigger issue as the returns traditionally associated with this market wither just a bit.

The industry seems resigned to the growing use of ETFs, so we'll undoubtedly see more companies embrace passive products. To be sure, we'll also see more actively managed bond ETFs. In fact, no less than PIMCO has announced plans to start such a product. These options are nice for many advisors and end investors who want to tailor their asset allocation at a fairly granular level. The price is right. This certainly steps up the pressure on traditional fixed income managers.

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