NEW YORK (CNN/Money) - I'd like to get the diversification of a bond fund, but would rather not pay the high management fees of a mutual fund. Are there exchange traded funds (ETFs) that track bond indices?

-- Katherine, New York, NY

Would the Democrats like to move into the White House next January? Would George W like another four-year term? Is it cold in New Hampshire in January?

The answer to these questions -- and yours about bond ETFs -- is a resounding Yes!

The reason you don't hear so much about bond ETFs, though, is that my stock-obsessed financial journalist colleagues spend virtually all their time writing about the expanding menu of equity ETFs -- those that track everything from large to small caps, growth to value, specific industries and countries.

That leaves little time to inform people like yourself that ETFs also come in several bond flavors.

Let's say, for example, that you want to own a representative slice of the entire investment grade U.S. bond market in one fund. Well, in that case, you could buy the Lehman Aggregate Bond Fund iShare (ticker: AGG), an ETF that, as its name implies, tracks the Lehman Brothers Aggregate index.

By doing this, you would own a portfolio made up of Treasury bonds, government agency issues and corporate bonds as well -- basically the whole U.S. bond market in a single basket.

If you wanted to take a more tailored approach, you can do that too, however. For example, you can also buy iShares that invest only in Treasury bonds. In fact, iShare Treasuries come in maturities of one to three years (SHY), seven to 10 years (IEF) and 20-plus years (TLT).

So if you're worried that rates might be about to rise, you might want to stick to the shorter end. If, on the other hand, you feel we could be on the verge of deflation that would push rates down, you could opt for longer-term Treasuries whose prices would get the biggest boost from declining rates.

Of course, if you feel inflation is more likely to be an issue than deflation, you can always go with the iShares TIPS fund (TIP), which invests in Treasury Inflation Protected Securities, that is, Treasury issues whose income payouts and principal values are designed to rise with inflation.

There's even an ETF that tracks a Goldman Sachs index of corporate bonds, the iShares GS $ InvesTop Corporate Bond Fund (LQD).

But the real question for investors like yourself is whether you're better off in a bond ETF or a low-cost bond index fund or bond fund that specializes in a very specific type of securities, such as Treasuries within a specific maturity range.

There's no question that ETFs' annual expenses can be razor thin. The annual expense ratio for the Lehman Aggregate and TIPS iShares are just 0.20 percent, while the Treasury portfolios have annual expenses of just 0.15 percent.

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But annual expenses aren't the only ones you incur when you buy an ETF. You've also got to pay a brokerage commission when you buy and sell. And if you're buying in small quantities, that commission can dramatically boost the cost. A $20 commission on a $1,000 investment, for example, represents a cost of 2 percent of your investment.

Of course, if you hold the ETF a long time, you are effectively stretching that commission out over a long period and reducing the annual cost. But even for a 10-year holding period, we're still talking about a sizeable bump in the annual cost. And that's not even factoring in the commission when you sell.

By contrast, you can get Vanguard's Total Bond Market index fund (VBMFX) with an annual expense ratio of 0.22 percent or Vanguard's Short (VBISX), Intermediate (VBIIX) or Long-term Bond (VBLTX) Index funds for just 0.21 percent.

Vanguard doesn't have Treasury index funds, although it does have actively managed short-, intermediate and long-term Treasury portfolios with annual expenses of 0.28 percent. And you pay no brokerage commission to get into these funds.

So unless you're really investing big bucks (say, $20,000 or more) and holding the fund for a very long time (like 10 years or longer), I'm not sure that you'd be any better off in an ETF than a low-cost index fund.

On the equity side, ETFs can offer some significant tax advantages over index and other funds that may compensate for brokerage costs, but the potential for tax savings on bonds is more limited since the bulk of bonds' returns tends to come not in capital gains but in income, which can't be sheltered even by ETFs.

Bottom line: I'm a fan of bond ETFs and think investors ought to consider them. But I suspect that for most investors, a low-cost bond index fund would work just as well, if not better.

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "Investing for the Financially Challenged." He also answers viewers' questions on CNNfn's Money & Markets at 4:40 PM on Mondays.