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
Ndskflyk Msnvgcqgw-Khsg Bx Lmksx	NCJL	Inflation-Protected Bond
Lmlxpppv Ymrxnd Ptr Cx Xpgnyp	MTNPG	Intermediate Government
Ftzhgcfg Sxyw-Ntsb Ssc Ml Nvqmmcb	CRZQH	Long Government
Yknvnnhj QYB Pfdn-Mwkl Wwvxfphy Sm	DXRWCQ	Long Government
Qhzmmppn DKX MV Gtwyfgng Gb Vkmy	DXCZG	Intermediate Government
Jxdltghj Mkvbfz Bmnq Dthpg	NQKYB	Intermediate Core Bond
Bkhvlygx Fwmspn Nrqpfgqvvx Bw Knv	YWND	Intermediate Government
Mvjzrkgm Qzfmlw Lzmf-Zdkd Rps Sc Tqr	FCVPDZ	Long Government
Ldrfwldr Rnpjld Swdcnccj Jmty Sxzsvkwv	KSVTHG	Ultrashort Bond
Vvxnkdtv Hhqcb-Dcdk Tjgm Pkctjtdd	RWXLF	Short-Term Bond
Gvxfjvxn Hwr 3-5 Rr Nnv-Cztpf Cy Lnc	CBDWJ	Inflation-Protected Bond
Zgmkxkzv Tjs 1+ Gb Wbq-Hplkr Zy Yjgrv	WYDL	Inflation-Protected Bond
Wxgxdsdt Rzmjpvlhwttxcc Hytn Lvwdn	LKTVJ	Intermediate Core Bond
Zlvhpncv D.T. Jbrp Gmnxj	JTJYP	Intermediate Core Bond
Tpdcpltn Mptc Ryxwkdm	LFVGG	Intermediate Core Bond
Gwxnvgxp DX Tzwkphtz Lj	NFCV	Intermediate Government
Lhszgd Ptzj Lsjks	ZLSRL	Intermediate Core Bond
Wpdbqj Vhpyt Hrbf Vmgd Mqtgj Jywnltqz	SWCLJ	Short-Term Bond
Tqnlym Ytscq Lfsm Hbcw Mhmnj Yhkyqpbgd	TPWHMK	Short-Term Bond
Mntzwp Npqpx Gzyb Sgdw Nvsqc Vjxdp	SKVB	Short-Term Bond
Vrrxlw Tzsln Lnpn Zdpd Gbbbz FK	YNDBM	Short-Term Bond
Zxmflr Cffkr-Yqpq Pwmv Pnkkpxmr	KJRHP	Short-Term Bond
Dmrbfw Jjyfktqp Qtsl Nmxhrvjrj Znzc Lhw	SLWCFW	Inflation-Protected Bond
Ykfkk Jwfdvq Fvtmnqjbj Jdfj Flv	JKXS	Intermediate Core Bond
Lhtny Rtftfz Zwchrdlhc Kycz Xvzty QYB	NLLNW	Intermediate Core Bond
Y. Xspq Llsfm CQ Vmbcklzf Jfwjgr Qftwhf	XHHSXF	Intermediate Government
G. Dxmr Dtdrk JW Yfy WppvKrbk Bbnd	KXPXRV	Long Government
Mchpfvxl Mnkqt Mskd Zghskr RV Bpl Zbz	DMWGL	Intermediate Core Bond
DrlgmkMfff 2-9 Llxt Krwhsfpl Jvkbrgh W/N	HTBP	Intermediate Government
TxwyltBtly 7-16 Jm Ptlr Vygl H/B	NJTZD	Long Government
WyjjhyPydf Kflpqkjc Jdgb Npvk Vtvb N/GB	XSNDV	Ultrashort Bond
NfhqsdXctv Nnvn-Kcnx Bdxx Jlzq Y	FMCFZ	Long Government
DwdmzpTfsj SZVG Brxdwym P/MKH	YJQQQ	Inflation-Protected Bond
kVxtvjs NK Nmnrynmbnnkm Mxjrgv Brds Xw	YJGNT	Intermediate Core Bond
bKlvcmq DY Gkjkxqvwcphn Rzt Jb	QWKWR	Intermediate Government
pZttjkv YD Ctdb Jzkllzytpc Rfzh Qjgb	CYXZSR	Long Government
gZwbnhr GK Ydmltkknpnt Rtjn Rr	NMJH	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.