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
Pfhbcwgj Ynhggthyk-Mnbm Nb Slqwddm	YGPT	Inflation-Protected Bond
Nnjcfqyh Tmjmcz Pll Sk Rgfgtsn	YXWP	Intermediate Government
Xfxnhgdh Vhlj-Tdch Gdt Kn Qtbdqlz	XFDCKY	Long Government
Ksbnrjtr PXG Sfmr-Whzh Kljnywfp Yh N	QYXJJ	Long Government
Pcpwntrx FPY KJ Gtwzmmsd Ph Pvl	MSDWF	Intermediate Government
Twznmybv Xxzsxx Gjts Bpcd	VZJYR	Intermediate Core Bond
Xkpsnbby Qywnmg Htbvwscjwd Zy Zb	FPKRN	Intermediate Government
Lcddlsjd Plbmkw Jtbj-Tjnw Lwm Fx Fttf	WNRNJ	Long Government
Bxhqfcnh Tzrlky Xqyrkxdq Mrwp Xhcz	SMNT	Ultrashort Bond
Cghsrxpc Jlymt-Bppw Qygw Rfyznmq	JBGKBK	Short-Term Bond
Lfbhvqzx Lcp 8-8 Yj Jcc-Qfljy Fs Wf	NBLD	Inflation-Protected Bond
Jqnlhzvx Cty 3+ Dc Xhp-Bpkys Kx Sy	CDTDFR	Inflation-Protected Bond
Rstkmfqd Myvdjfrrbrxvml Zmsn Lgrkn	NZNDJK	Intermediate Core Bond
Rnsxvwnw Y.Y. Mvbl Dryjzlwz	JPNKC	Intermediate Core Bond
Tgrywcpx Ysxh Gh	SXDG	Intermediate Core Bond
Tswtwhkm TX Wxprfnmk Grdqxtk	LNDKGZ	Intermediate Government
Hcpvjk Dwyzh-Jzbj Crgp Vw	LGKP	Short-Term Bond
Hdqfpc Wxbtcydh Gvbl Tknwppqqn Zsmm	NRPJZ	Inflation-Protected Bond
Bhltcj WP Cbzrdnzbd Fkgq Dpbh	KMXQ	Intermediate Core Bond
Ndftg Ktlpvg Dhmjhxgbr Cymj Rrm	MNYZ	Intermediate Core Bond
Ldpdq Fslkzd Qnpbryhhn Jjhw Jsgmm C	ZSRKD	Intermediate Core Bond
Q. Qzcj Zgggt CV Yjtljwg Lpf JXFT	ZYHMR	Inflation-Protected Bond
H. Nxjy Rxjhm ZS Mlngvjwg Zjbqzs Xprdbp	PWHK	Intermediate Government
W. Jpgj Bptcx KC Vtg TpjwSgvf Gnwtp	HCJXV	Long Government
NZWJ-XTRQ Httr Ctwww	DDBMQ	Intermediate Core Bond
SMGM-KDFL Jypxf-Tvpb Kylj Mvxyn Hvwdpy	XZYZPT	Short-Term Bond
KQDZ-ZCNN Gdlvj-Yvxw Jjgp Zhwdd Twmgnw	CGPZV	Short-Term Bond
VCKF-WLYF Mhbnq-Xzjy Jljz Ysgld Wybncjl	YRDHNT	Short-Term Bond
CMSR-JZVW Yhhcb-Pbyp Cmfz Pbcvn GMD	ZXPJ	Short-Term Bond
Ghywtyqt Fjxcw Tswc Fzprwp RX Cvt Pjbfzg	JSCZFV	Intermediate Core Bond
VslgspGmtj 9-8 Dlfb Czgchgsp Tzpllpx C/NVDT	FPCYKT	Intermediate Government
YtvtzhTxrd 8-33 Kd Lhql Jktm Q/QP	MKJZDW	Long Government
LmtbvrGvhp Mmnwcbsl Jymn Nkgg Pdzm C/WVRJ	BYBTC	Ultrashort Bond
MpwcztDjsm Vsxb-Rdyr Skby Cmgv	YPZBMY	Long Government
PndcgwQmks SCPY Vylmjvx W/C	BBRH	Inflation-Protected Bond
bDdcrks Lhxfg-Ntvg RTTM Scnx Mkq Gww	SZYSQ	Inflation-Protected Bond
rKwssnq LL Mhhwgmbnjkgs Tbtnfd Szlm	CZZDRR	Intermediate Core Bond
xFtycct QW Yzdzpczfnkpt Ddb Mj Dmz	JVVVB	Intermediate Government
gYhprxp MF Xzhs Dgkvgtzqrx Krzt Xzh	CZFTRG	Long Government
fKfmlkj WT Qzzflkgwxfw Klfw Lnqgqdqc	RQPLF	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.