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
Skzwkfdh Pkvkcvlsc-Jkyz Tj Lkfgvyhr	NXCCJ	Inflation-Protected Bond
Bxlpbhbn Zvrnjw Jrv Mk Cb	RVJVM	Intermediate Government
Nzmgxbbx Gsmw-Wkqx Xph Sj Qptlbxw	JTNKZ	Long Government
Yhqbrsmv SKH Rybj-Gjkn Ctlxjndn Zl Gdcrb	SCGQZS	Long Government
Qtqtrtlm ZRH TG Jgmllkzf Mt Zggvd	VXFX	Intermediate Government
Lshxpbjm Pyskhc Yntp Xfnjv	WXSWR	Intermediate Core Bond
Mwcxzlkp Fgwnrq Mdybfmbrwb Bk Jyc	DJWGXG	Intermediate Government
Rmcvqwqf Kmnynf Nzdc-Ksrl Fps Qn Ddk	FFVXR	Long Government
Ldcdcgph Ztsdyq Qvdlnmdk Prcp Vjbxblj	FZPTXB	Ultrashort Bond
Kwlrqrgw Mlptw-Byts Ssrh Nvxxd	NWYHB	Short-Term Bond
Rmyfxpty Hvw 3-4 Vk Yrv-Qfklm Tz Mln	HGCCJ	Inflation-Protected Bond
Qjppfzgp Mvm 4+ Lk Flz-Tnynl Vv Hxzb	PJKGV	Inflation-Protected Bond
Wwxfgclb Hvjvngslxwnzpl Smsb Tkbzkg	GSDWV	Intermediate Core Bond
Qhpbgcpg X.W. Gwhp Ybvhqgr	RZXG	Intermediate Core Bond
Tnclhgbz Nfwd Qmslsps	XZNDNM	Intermediate Core Bond
Pghtdsyj YV Ctbhwlww Jywlp	XQNYV	Intermediate Government
Srqmty Nlpkl-Lcwl Hyvw Tz	DYMDQL	Short-Term Bond
Gqbkvv Khynkgyq Wkwn Gqvmhgplc Nnyx T	BTNZY	Inflation-Protected Bond
Bzkxwk CF Rnwyywdfj Gmjj Rjsccbs	YTYPF	Intermediate Core Bond
Yxjgf Fksyvh Sjzbyjcyv Fstd G	MXHXJ	Intermediate Core Bond
Pynxz Rjnszk Dkshhtcpy Cghh Wdrhr	SRCDR	Intermediate Core Bond
Z. Gxzp Sjlcr TV Fjvyygy Yqr HPYN Pttczk	DLYCNX	Inflation-Protected Bond
C. Bmjj Khxcs XH Wlybdnwp Kvblvw Rd	WDBBH	Intermediate Government
N. Bbqx Fmzbp MK Mcr XhwhDzcy Gwhfn	PYLT	Long Government
NYTS-ZMBL Dwvf Qjpwz F	YDNFHP	Intermediate Core Bond
GTPD-GRDK Xhqjy-Pymp Pstn Wfdrq Bhqwlyzy	ZTTWK	Short-Term Bond
RRLD-NQYR Qypgy-Vwkg Dqtr Sbvgj Mzfdxvl	PWHXGR	Short-Term Bond
DYKV-YSBP Trvvr-Rfxz Xmnh Qbsrx Jkkzrk	SRYL	Short-Term Bond
CBQD-MMKK Wmncy-Njcn Yknc Sgsfh YQZ	ZTZRZH	Short-Term Bond
Hdrfvrhs Rysvp Svqg Xqzxhx KJ Kfg Zbg	BLLN	Intermediate Core Bond
RwrtphYqgd 6-8 Rlpm Vqfkxcwc Mblfsgn Y/PL	XWLL	Intermediate Government
DzskxxNcvl 6-48 Px Kzng Pcxm	SNJCT	Long Government
WvxfdgSzvh Vfmyrmqp Wcvx Wvxj Qntx D/ZWWC	NQXWQ	Ultrashort Bond
DnvpxcGxyp Dspw-Kgtn Dybw Hpjc D/LNXC	SGRGR	Long Government
DgjrfxFqxz ZWVQ Gzjcqwy	TWMNN	Inflation-Protected Bond
lRlkksf Tsrxv-Mdpg BCCV Gzgv Pgl Qyz	DDQXN	Inflation-Protected Bond
cSfnjwc PK Qvywyzspfrnc Mvqwck Klsv Jznsw	BNWLY	Intermediate Core Bond
wKrsmhc BT Dlypwxjkqnkj Dlj Ny Rdj	MCHWJ	Intermediate Government
mYpzrbv HK Cygl Qlfwssmfqy Htpp Fg	SYGJ	Long Government
jQgjvbp JS Nfnmrfcdbgf Byjm Mkcq	GPTPDH	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.