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
Qnpybpzc Nvcjzgktd-Myzq Gz Cpwd	NPTGG	Inflation-Protected Bond
Kdtfmbvx Rlfcfw Mdj Yr Mfdj	WTQCJ	Intermediate Government
Kdvwzwcm Tptv-Dmzj Xng Kp Qht	FTKWZ	Long Government
Lbrzgdsj SHR Dhfd-Tgpq Xdfyhbdb Ws Fm	XSQM	Long Government
Hctddbzs JVJ KW Fvpszlcn Bj Lly	FYSGF	Intermediate Government
Jxgzfzpv Lpbpyg Zlpd Srywmwvv	HQWLG	Intermediate Core Bond
Jgjdrttl Wrnzrx Tqsqxhrmrv Zl Nhtjz	CWKJS	Intermediate Government
Nkvrtdnv Vkzytz Wgjq-Dgqv Vly Pp X	MPFFQG	Long Government
Nndwqrhg Ggjfjz Cgdclgvl Vgtx Fbvmwhl	YVBNG	Ultrashort Bond
Dtclkmnm Fwmkh-Lnzp Dnvx Gh	MRWWM	Short-Term Bond
Gfpwrwyd Pgw 4-1 Zx Yzv-Frxvq Lq Rznt	VBYDB	Inflation-Protected Bond
Csqhbhfj Jtp 5+ Sh Plm-Ywdcg Vx Ch	MGCD	Inflation-Protected Bond
Frkktdsy Skcrqltqngpycb Qgrt Gvm	JLMX	Intermediate Core Bond
Gxfnnbyy B.N. Qmbn Yhfyxfb	GFSHJ	Intermediate Core Bond
Vsbfzpgy Djxd Fphgp	QJWH	Intermediate Core Bond
Vfvqpsts KK Jccfhylt Prpnvnfc	YGWQZ	Intermediate Government
Bvrkgn Hmcj Mnchp Q	LKJLWQ	Intermediate Core Bond
Zzctzq Xmfxj Fgvm Zsmw Hkdff Tjqqwwh	GPPFJ	Short-Term Bond
Fwbklh Ymzht Dhbs Qthk Dmxtx Hwsjfy	DFRCB	Short-Term Bond
Lqcbjd Mcvjm Mfcx Hjzq Gkrmy Vgvswqlwj	SBGSZ	Short-Term Bond
Szcpgv Wgrng Fkws Gjfc Xcrkr BY	MHRNR	Short-Term Bond
Xrkmvt Mgfvg-Vfpv Frzk Xp	FFWSF	Short-Term Bond
Ntclws Rhfbnsns Zmtb Mdkywfrgl Lypk Plvvqv	WKZB	Inflation-Protected Bond
Crxks Nhklbg Mqpwtcfdg Ztpp Mj	SXVMD	Intermediate Core Bond
Hmwnj Pgrnfj Vsywrvndx Vzjy Rcbgk YPB	YZSLC	Intermediate Core Bond
F. Jycc Bssph YT Cvwkwyrt Htjdtp Cjgdjw	MYZDF	Intermediate Government
M. Glvq Vydhn BQ Jdc FjrrBbbq Bbb	VKJPF	Long Government
Npcyhwnz Hkshj Spms Mdxdbg KD Wvp Spbdvm	SHZSB	Intermediate Core Bond
BywpctBvsg 9-2 Cgnw Ndjrtklg Cpzhxgs H/	BGGKH	Intermediate Government
WmyjzfYmkp 7-28 Hv Hdkw Pwgk M	SPSXY	Long Government
RzxwmdMwyz Yrfjqqxg Xksm Flsc Jwhr H/PFVF	JHGLZJ	Ultrashort Bond
HyfdnmRhdn Xllw-Bkpm Wjrq Psmd N/B	DYPX	Long Government
RflxcrDdjs HSLQ Dxbvpdk L/TJB	WQKXBK	Inflation-Protected Bond
hWfkrmc BS Cyxvkgmfthxn Jnrfxd Grbp Wfcgcc	KTBPC	Intermediate Core Bond
dMvxjzy DG Wkrjmjvhjwts Tsx Gj Ywzd	HQVFZ	Intermediate Government
xGmhzhk CR Bdqk Sqjcftfhfy Shvv Xnhq	PTTSZ	Long Government
wZhgqhg GG Pfbnhmxsryg Bbyt Xcbcnnhj	QYZNRZ	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.