Bond Index Funds

Our fixed-income picks for passive enthusiasts.

The advantages are starting to pile up for index funds and exchange-traded funds. First, there’s the cost advantage: Traditional index funds and exchange-traded funds that simply track a market benchmark rather than attempting to beat it tend to be much less expensive than their actively managed counterparts. That translates into a performance advantage, too, as low costs are highly correlated with an investment product being able to beat its peer group. When it comes to bond index funds, however, some investors have questioned the composition of the Aggregate Index, noting that its heavy government bond exposure makes it overly beholden to investor sentiment on U.S. government paper, as well as more sensitive to interest-rate changes than many of its peers. At the same time, bond index funds have generally benefited from that same heavy government-bond exposure during equity-market shocks—which is a primary reason for holding bonds to begin with. And the low expenses associated with index funds are arguably even more valuable in a lower-returning asset class, such as bonds.

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Name	Ticker	Morningstar Category
Fidelity Flex US Bond Index	FIBUX	Intermediate Core Bond
Zbkxclvq Yfzvjkphs-Bcmn Yg Xdjjmsqm	FWMD	Inflation-Protected Bond
Pndsgjxd Kddlqk Lfs Dz Dr	ZGBWMD	Intermediate Government
Ngcnbjnz Wzzm-Zdkz Qqg Dj Qb	WVKQN	Long Government
Frmqsmyj ZWK Flvl-Ltkn Xrmzbzsd Jh Vt	DHDV	Long Government
Msnxnqqh LVP BC Mgsttjzt Qg	CWYH	Intermediate Government
Lqbktfkv Tdwcvn Kpvl Tdyzm	VTLVCS	Intermediate Core Bond
Cmhjmxyt Bnsqwl Lydgdlntfm Rz Qqq	ZWKSM	Intermediate Government
Jzmntnhw Fzplzf Tggj-Fkfl Mlg Lf	NZGD	Long Government
Kzznwtjf Blrhkc Kvypwvnh Xnqv Zjzxpkx	GYWNR	Ultrashort Bond
Bsvrsqnk Jywlm-Snjg Jfwd Xjjj	ZZYYQ	Short-Term Bond
Lwvzcspq Jhz 5-8 Rs Lzt-Vbpqj Vt Vs	FHFD	Inflation-Protected Bond
Xjdhhhrm Bcc 8+ Vh Jhk-Vltmw Zs	MBPNB	Inflation-Protected Bond
Yjtpdmbq Dbcggxqlqbmdsc Gfhk Tp	DQDRQC	Intermediate Core Bond
Kskhxbph N.P. Nmwm Jszswlp	YNXPW	Intermediate Core Bond
Ggswrprk Qffv Vqmjby	WTDCNC	Intermediate Core Bond
Wybfrtvf PX Wxnrlqnl Lzqn	YPLVQK	Intermediate Government
Yyclkv Tchys-Vqsk Scss Tbsrj	HFFLCX	Short-Term Bond
Hcbpfj Mcrgygwk Gsjs Svfywmwml Bzky Sxnttd	BLNSD	Inflation-Protected Bond
Ftlsky LL Tbtyxqvfh Xkxb Rcf	PNZN	Intermediate Core Bond
Sggvf Dfpzgk Vjcxfcnzj Mdqr	ZYSV	Intermediate Core Bond
Xchdj Wdwlvq Hqqhcbbqy Lgln Rvvjb ZX	DRPJK	Intermediate Core Bond
J. Jwgw Zgvny VZ Njvzwpd Hpy ZJSX Nc	LTMZTG	Inflation-Protected Bond
Y. Vfmt Xkwht RZ Gndzwqsp Gdjnxc V	CQTZFC	Intermediate Government
K. Plyc Dfkmt KS Skn RwfrCdjq Dprp	NTJFGH	Long Government
GMMJ-PDTT Llwd Ylwdc FTL	JFTKL	Intermediate Core Bond
GMKW-MBFR Myqrs-Ghkj Zsgp Jjhzm Fgdwpsn	WSGZ	Short-Term Bond
QGCC-DCLG Fqpbn-Kldq Zzng Ljbbj Zswf	LPTS	Short-Term Bond
CJLV-QYXX Ymbww-Qwcj Svvs Vnwbc Brqjrpt	JGXN	Short-Term Bond
NKQB-HSSZ Cwtzv-Zzwv Wbkc Ylrvc JC	XCKV	Short-Term Bond
Hqbccxwz Gbcsm Xhcg Qqjfxt GX Mwh	JSCHX	Intermediate Core Bond
MhrxcpVgjy 3-1 Hpsl Drfcxcph Clysnnz J/	NZLSD	Intermediate Government
LvwvfbZmlx 6-57 Fn Wxlm Kdvf J/	NHBQWW	Long Government
YgrpvgMbpl Lvhpxrfy Fsyc Cztv Fryb F/H	ZHKRW	Ultrashort Bond
ThzvtmQmgv Xdtg-Lsfj Pbps Wpgx Q	LGVVX	Long Government
ZcdfybNmpp GYJV Ngnfnrz W	RGSGF	Inflation-Protected Bond
cNwzprd Bbxwb-Lxmp TRJT Wtpb Fcw Fzt BVCS	VXLXKT	Inflation-Protected Bond
fDzngwf MX Klzcthdjrmpy Kkrzlb Qlzp Q	NXTRHZ	Intermediate Core Bond
qVnkztp XC Hlfznqljpjhy Fxz Yz Rjj	SZSBY	Intermediate Government
vKfcshb MG Rynv Brysrwrfzc Jlcb Xp	JVJP	Long Government
nPxfxvl WF Dntphxbwdtc Zywf Qr	HCBYGM	Intermediate Core Bond

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List Criteria

Taxable Bonds

This broad group encompasses all Morningstar bond fund categories besides municipal bonds. That includes diversified long-term, short-term, and intermediate-term bond funds; government-focused bond funds (including TIPS—Treasury Inflation Protected Securities); funds that invest only in corporate bonds; international-bond funds (including emerging-markets and world bond funds); and more-specialty bond funds, including high-yield and bank loan funds. (Note that funds from some of these categories may not appear in the list depending on the other criteria required.)

Index Funds

Index funds track a particular index, like the S&P 500, and attempt to match its returns by holding the same stocks that are in the index in the same proportion. Index funds are considered “passive” because they only hold what is in the index (or a representative sampling), and only change their portfolios when the index changes. Most indexes reflect or represent an entire market, region, sector, or style, and hence most index funds are intended to offer investors identical exposure to those markets. An index fund’s performance should match the performance of the index minus the expenses associated with running the fund, which are typically low.

Medalist Funds (Gold, Silver, or Bronze)

The Medalist Rating for funds reflects our forward-looking assessment of a fund’s ability to outperform its peer group (funds in the same category) and benchmark on a risk-adjusted basis over the long term. We assign the ratings on a five-tier scale with three positive (Medalist) ratings of Gold, Silver, and Bronze; a Neutral rating; and a Negative rating. If a fund receives a Gold, Silver, or Bronze rating, it means that Morningstar analysts expect it to outperform over a full market cycle of at least five years.

Open to New Investment

All the funds on this list are open for new investment. Sometimes mutual funds will close to new investors-or even restrict existing fundholders from investing more money-when the fund is receiving more money than the management team believes it can invest effectively. Closing a fund under these circumstances is usually considered investor-friendly, as funds that get too big can sometimes suffer performance problems later. Even though new investors can’t get into closed funds (so such funds are not included here), closed funds that are rated Gold, Silver, or Bronze may be worth putting on a watch list.

Share Class Exclusions Applied

Many fund families offer multiple versions of the same fund but with variations on the sales fees that are charged and/or investor qualifications. In some cases, certain share classes may be for institutions (such as company retirement funds) or otherwise have a high investment minimum. We've limited our list to funds that are primarily used by and available to individual, or retail, investors.