At the beginning of this year, Barclays Global Advisors was the only investment management company with a bond exchange-traded fund. Today, however, there are nearly two dozen fixed-income ETFs from the likes of State Street Global Advisors and Vanguard, with more on the way from Bear Stearns and Ameristock.

"The income space is ripe for ETF innovation," P. Michael Jones, chief investment officer at Wachovia Securities, told the Financial Times. "And it's not just narrowed down to bonds. To the extent that we can create income-oriented solutions that are lower cost, they will take off like a rocket."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.