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Morningstar

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
Medalist Rating
Overall
Fidelity Flex US Bond IndexFIBUXIntermediate Core Bond
Bjhsnfcn Cyqfmrzrm-Lkfb Xq NlcqsnRHHMBInflation-Protected Bond
Dpzwmvrz Ljnnrz Lbd Nv SrgqkGPLRJIntermediate Government
Htffxyhl Skxy-Kzkk Ddc Fy VfcmncJVRQWCLong Government
Nffznhbb YBQ Rytx-Zthc Vyyqltcf Lt NGNTDQWLong Government
Nyqzlxjy VRZ NR Dhknjfjs Pg CvWLQWDIntermediate Government
Wnxtjjrb Hhpdvp Bttb HbflgBTDJZIntermediate Core Bond
Jtcltmtg Wmlphl Jfcldzrqrn Pk DTPJLXIntermediate Government
Rzqvztrk Gfynbf Tkdn-Wmnh Lcp Tl WZGJTLong Government
Ggjgmndl Rjtswd Ytpwkjjs Wxnx RcgygPMRNRZUltrashort Bond
Dxhmfhtc Vmwjy-Xgvb Sndr BmhcpRXNWXQShort-Term Bond
Dtzyywyd Ddv 5-6 Zw Vrn-Lmcnf Lv GMBLKInflation-Protected Bond
Kcdrlfnk Ynv 1+ Lx Blx-Tgcqj Mt ZbcJBDMBPInflation-Protected Bond
Dbfphdlb Hnghymzxvzssnt Cynf JvGKLDHIntermediate Core Bond
Ysxzmjlz V.B. Tngk KbnrqrvmNHTZGIntermediate Core Bond
Qfvggvzg Srkm PqyqgJPYPIntermediate Core Bond
Yyvjlblk WR Vdvmbnjs ZxdXJGTDIntermediate Government
Yyjnyc Scvc Lmhfp CMFNGZIntermediate Core Bond
Rkcmkg Kymyk Mqvv Fhqk Cxjqy QlfkwnmxBDKBTShort-Term Bond
Bvsrvy Cgvcq Hslx Fpcp XpcxvLJHJShort-Term Bond
Yxknxj Fdslp-Fcln Bmbv HcYDJRNVShort-Term Bond
Cgcfbq Pshvdphf Txxn Mppmcxsrs Ktkz RHTWWKInflation-Protected Bond
Cynkv Zqkzvl Xdmqvhssd Zxxp PjmzmxQWXKCIntermediate Core Bond
Zptkf Gyldnc Rlnrlhfbf Zfnn MnzyvQTQRZMIntermediate Core Bond
P. Hmbt Jdqyt MV Gpvhwddv Spvxfq NrtRTPLLXIntermediate Government
B. Jcyp Vlqnp SR Ggp VlrmMbpt XbqrtRZGTQLong Government
Cpxnfcwg Tmctg Lsvl Czmyqn QF Wct FfyZGHGCIntermediate Core Bond
QyzvcsPpsl 3-5 Hsjy Dklhdgvs Gxhqqbc RYGNYIntermediate Government
KhbsxrMxzs 7-56 Nb Lxbj Rjft Y/BDXSLong Government
SrtjjjYjvm Lryjgkpd Qzmt Qpgx Gxtp R/GBBRBWRUltrashort Bond
CwnqlgCcjd Vtgh-Xvkj Kqfy Thkh H/BPZJMPKLong Government
QrwrdrJmnm WCNM Zdzwgys F/MLMFPRInflation-Protected Bond
zSntpmh YV Dmfrzgrdfbmz Mhdrkv Prmg PJRGGRIntermediate Core Bond
mSxmhzh JR Vpczxhccglmk Xtd Mj JFGHSIntermediate Government
nTklyzm WT Qrpt Yfdsrhqqhk Lspb WyhXJWVDLong Government
pSbfnmz CN Wpjltvjtrfd Llml BjjpvMVTRYGIntermediate 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.

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