It's been an amazing comeback year for the fixed-income markets following the interest rate volatility in 2013, especially in light of the sentiment statistics at the time calling for a steady rise for interest rates into 2015. As a result, I doubt that many investors would have thought we would breach the psychologically significant 2% mark on the 10-year Treasury note in 2014. 

It's undeniably been an interesting year for domestic bond participants. Notable shake ups have included fixed-income royalty Bill Gross leaving the firm he founded for a small competitor, and quantitative easing finally coming to an end.  However, looking back over the last 12 months, it's the performance of an investor's bond portfolio that is going to motivate changes moving forward.

Which dredges up the age old comparative anomaly, passive or active management in 2015?  With the full-year 2014 numbers almost in, it's clear that investors in the highest rated actively-managed bond funds came out on top once again.  Using the Barclays Aggregate Index as the benchmark for all multi-sector and intermediate term bond funds, it's clear that managers that are granted the most levity used it to steer their portfolios away from index-like returns in treasury and agency securities.  Instead they coveted emerging market, corporate, and lower rated issues.

Examining the year-to-date performance results of the benchmark's corresponding ETF counterparts, the iShares Core Bond ETF (AGG) and the Vanguard Total Bond ETF (BND).  The total return tally resides at roughly 5.75%, which is palpable with rates already at very depressed levels.  Not surprisingly there is nearly $50 billion in assets socked away in these two funds, with their general investor appeal being low fees and easy to understand product.  However, with just a small amount of research acumen, it's easy to see that the index compilation methodology is overwhelmingly tilted toward the largest domestic issuers: The u.s. Treasury, GSEs, and large corporations.