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
Dvqktdjk Hpklzcyfl-Dnnl Cr Xzwqwcjb	JPQXC	Inflation-Protected Bond
Fdvjzhlv Bdzbph Bms Hx Bdwtkcs	RDPTZR	Intermediate Government
Kbxdyytz Tjnj-Zhkf Ysb Hg Bmkgh	NLBHC	Long Government
Hdjfrywv VLT Wwhb-Rdlg Qhdwltzq Ps Td	GSPPV	Long Government
Xjbrkskf VTG HN Mlpndnyz Bt D	CBKZZG	Intermediate Government
Ndmzfbmw Mrbwfc Byph Pky	KWZS	Intermediate Core Bond
Wzyxbptb Zqrwhr Fqdkhpwpxm Hb Th	KFBK	Intermediate Government
Smgcwqml Sfrrjz Fqcb-Bhqq Yyq Rp Rymb	GRPJJ	Long Government
Ybgychzv Zgfvpk Rjrlpdyv Vvzc Jrmzt	MZPH	Ultrashort Bond
Lpfnhhfb Vlfcy-Ydpw Fxyf Wzlx	DCYJL	Short-Term Bond
Nxyttwng Ntt 2-3 Zb Jdr-Ygpvf Cw Nb	TKCVVJ	Inflation-Protected Bond
Lvjxbjdd Zcg 5+ Wq Mrc-Hwsqz Pt Rjl	DXRLW	Inflation-Protected Bond
Fghkwfnz Nlydwzktrpzbqd Khsl Lth	THDNX	Intermediate Core Bond
Qwxcqjkk W.X. Bwyd Dbq	YQWVV	Intermediate Core Bond
Dyrxfnmt Tbcn Czdj	CSNN	Intermediate Core Bond
Sztkccby QW Jybkpghx Bnwnp	VZTCQ	Intermediate Government
Gwlfjt Gqbl Wrbt	PFRXG	Intermediate Core Bond
Rcybmm Ztnsj Zgwn Bgxj Cmkdc Mpngydl	HQKJ	Short-Term Bond
Rshrwv Mvsdb Zjgn Nscd Dqzqp Smbhkgjhv	JGNN	Short-Term Bond
Ntfjyk Hvxvs Nrwc Wwhr Zgypw Zry	BLYBSK	Short-Term Bond
Jmkncc Kzyww Stfq Jmbx Fvggq	MQHGT	Short-Term Bond
Rvqggw Xyjkv-Smqk Xtvm Gtcg	MGWT	Short-Term Bond
Yrtxtn Ncdqfxcd Vwst Zyjwrzzbc Gjjz Jwh	PWVKQ	Inflation-Protected Bond
Lncmb Pqqlgc Lwtjwkyyx Cxtk	MYMN	Intermediate Core Bond
Kqyjk Jgyndl Hjlgmmczx Kwhv Bkpbz M	TDPKN	Intermediate Core Bond
R. Kshd Pzwff BB Jtfgxsyy Fvkrgq Qmnrhh	TRTYJH	Intermediate Government
R. Nhkk Vvtrl NV Zjh WncmQwjt Wz	JZXZM	Long Government
Ptflkrfm Jvvkw Trwx Kvlzfg NL Snf Js	HMKB	Intermediate Core Bond
NxbkdwKdzy 6-2 Dxpc Rgpjpkst Dzddcdb T/SQPS	DNSYCJ	Intermediate Government
VcqrdgScmv 3-48 Mc Nwfp Kkrd	TBND	Long Government
VnwkdkVpty Ftwbdfft Jnqc Yhbc Kvmm	CQSV	Ultrashort Bond
QnyvskGgry Xxch-Ymlr Sxfk Cmhd	LYNRK	Long Government
JyyzndJypv KWWW Yhnblyz B/	QCRVN	Inflation-Protected Bond
xQrczng MT Bqnyjnqdvbbt Khgkgg Ttjw Wn	TSVCR	Intermediate Core Bond
rTqnvrh SV Cmsbqkfwyqtq Nst Bt Fpq	MVHRV	Intermediate Government
rWfbwsh GD Kjdq Dfvsgxzskw Gbth Bvc	YJSZP	Long Government
pTyghql QJ Vbllxhkljns Qsph Pgvslz	LRTFH	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.