An investor's fixed-income portfolio can easily beat the average bond fund. Learn how and why! : Outperforming your average bond fund on a risk-adjusted basis is not a particularly difficult task for the savvy retail investor. Investing in bond funds is a flawed exercise--particularly in a low interest rate environment. High management fees on bond funds offset much of their active management and diversification benefits. Fixed-income fund managers tend to strive for performance that tracks a respective index rather than portfolio optimization.