3 Core Bond Funds for the Long Haul

Russel Kinnel: Core bond funds are incredibly useful. Skilled managers build a diversified portfolio that you couldn’t build on your own because of the high dollar values needed to trade bonds. Also, they and their trading desk get much better prices than individuals could get. Core bond funds make good long-term holdings for just about any investor because they provide an appealing return for much less risk than stocks. To be sure, the returns aren’t equal to stock returns but just about the time you think you should go all in on equities is often the time that equities lose money.

Here are three good choices that are widely available in fund supermarkets without a front-end fee.

3 Core Bond Funds for the Long Haul

1. PGIM Total Return Bond PDBAX
2. Fidelity Intermediate Bond FTHRX
3. T. Rowe Price Tax-Free Income PRTAX

Gold-rated PGIM Total Return Bond benefits from a deep team. It takes on a little more interest-rate risk and a little more credit risk than peers, but it makes good use of that to produce appealing returns and yield. So, this is on the risky end of core but still a core bond fund.

On the lower-risk end, you’ll find Fidelity Intermediate Bond, which takes on less interest-rate and credit risk than most. That gives the fund a defensive profile that limits losses when interest rates spike or the economy hits a recession. The fund favors corporate credit over mortgages and other asset-backed securities, but it largely sticks to higher-quality corporate bonds.

Finally, in taxable accounts, a muni fund is a good idea. I like Silver-rated T. Rowe Price Tax-Free Income. The fund employs a research-intensive process to find attractive bonds. It generally avoids big macro calls and has delivered solid returns over time. Dino Mallas recently handed the reins over to Tim Taylor, a veteran investor with 25 years of experience.

Watch 3 Great Value Funds for 2024 for more from Russel Kinnel.