Take a veteran manager such as Auwaerter. In 1998, despite panic surrounding a crumbling Asian fixed-income market, he held durations fairly steady. That came at a time when managers at other bond firms were making large moves based on bets that a worldwide credit crash was coming.

"In the short term, the fund's returns were poor on an absolute basis. Jack Brennan, our chairman, was getting letters that I should be fired. But I pointed out to investors that we wouldn't waver from our mandate," Auwaerter noted.

Brennan backed him, as did the fund's institutional clients, and long-term-minded investors continue to reap the benefits. But will smaller, less-experienced bond ETFs meet the needs of short-term traders?

PLK Is Truly Active

The best answer is likely to come from PLK, which implements a true-blue active management process. "When you're talking about U.S. government and agency securities, the managers have a lot of flexibility, since these are such liquid markets of fixed income," said Ed McRedmond, Invesco PowerShares' senior vice president of portfolio strategies.

While it doesn't follow any particular benchmark, the Invesco managers internally will be trying to outperform the Lehman Brothers 1-3 Year Treasury Index.

Here's how it works. PLK has no restrictions on trading. "If the manager chooses, he can trade every day," said McRedmond. "And any trades the managers make will be reported at the end of the day."

But those changes won't show up on PowerShares' site until the next morning. "If investors go on the Website or Bloomberg, they'll see what the portfolio is before the market opens the next day," McRedmond explained.

The creation/redemption mechanism will include a relatively small cash component in order to keep the basket of securities matched with PLK's NAV on a daily basis. "It's always going to have some small cash component to reflect interest payments accumulating within the portfolio," McRedmond said.

The fund's primary creation/redemption process will be in-kind. And that's similar to other ETFs. "It's pretty standard, with the flexibility to do all-cash creations if needed," added McRedmond.

While such strategies sound good at least on paper, only time will tell if they can outperform, says Chuck Bowes, a San Francisco-based advisor and principal with Runyon & Bowes Financial Advisors.

"Over shorter time periods, there are certainly going to be bond ETF managers who'll outperform," he said. "But identifying them in advance is going to be just as difficult as it is in the mutual funds world."

And like others, Bowes points out that even if an active bond ETF proves a long-term success, investors will probably have active bond mutual funds at competitive price points from low-cost families such as Vanguard, Fidelity and Dimensional Fund Advisors to consider.

But investors won't be the only ones with choices between traditional mutual fund shops and ETFs. So will managers, who are more likely to be highly compensated—at least in the short term—working on the mutual fund side of the fence, adds Bowes.

"When the higher fee structures for active bond ETFs are considered along with the competing factors driving active management's role in the market, we remain extremely skeptical that, over time, active management will prove to add any more value in fixed-income ETFs than they do in mutual funds."

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