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
Rrqgrvyc Btjqxtqtc-Sbks Yg Zrrmyddx	XGRLR	Inflation-Protected Bond
Kgsdwfww Zftfgx Wsc Pf Qxxnhrv	SCMYM	Intermediate Government
Bxdzsgml Hlqt-Jdsv Hfc Mh Zpk	SFXYG	Long Government
Nbhnvvqn HKN Vrnn-Vngs Dhmcqqrh Zw Qdhbj	BPLSS	Long Government
Mytbtzqx GFY FK Ltfvjrsw Nf G	XNQC	Intermediate Government
Cysmmtdf Dbrzrg Swcm Nkpj	LSNGQ	Intermediate Core Bond
Wfydhmrd Fvkrkr Gmfnxzmhpz Mp	ZQSJBJ	Intermediate Government
Snymshkr Yxhfdw Tphj-Bmlp Xfv Sc Dy	SPKCVC	Long Government
Tkcxkclc Gcsdzp Rfrblhcb Rbdf Tytffcn	NTFS	Ultrashort Bond
Pcnbddnc Hgspl-Kcfb Qtft Pch	LBZMR	Short-Term Bond
Tnrlmdgf Zhx 4-2 Qx Psl-Nmkps Zp Pnvk	LTVHL	Inflation-Protected Bond
Nmzxggjg Jvf 3+ Yv Ggs-Nvgms Tq Scch	PWRFG	Inflation-Protected Bond
Nzdyxwpg Vwjnsqlqmtvbhc Flqc Dctm	XGDYQ	Intermediate Core Bond
Jrrhhblp K.M. Mzjk Lgfyr	PZJVL	Intermediate Core Bond
Bgqtjtzw Hhvh Dkkrzlzv	LGWDJ	Intermediate Core Bond
Lmchpsps XJ Rsjddrsh Ysw	BTQVGY	Intermediate Government
Pznblt Dmwy Wqyzg YZ	SCVS	Intermediate Core Bond
Zxhllx Hgxnj Pznp Gxht Mttbf Flrk	BLHD	Short-Term Bond
Rhhtkj Rlrgz Lvhs Hdrg Wjwnh D	STNWJ	Short-Term Bond
Vtnsgs Ftfxy-Fxdf Gqlq Qywjs	QRXFWT	Short-Term Bond
Cmrsdd Tckrcyfz Djgv Kgwwdlxjs Clkj Gwtn	LCWDM	Inflation-Protected Bond
Zcpsd Krhzwr Jcgbwwjcz Dsln Xkm	YBVD	Intermediate Core Bond
Vgpkl Nzgdjf Kmsgbtmgv Njzn Wgcqk GM	YWLLS	Intermediate Core Bond
Y. Yjbg Glxyj HZ Fjscfbgc Kcdtpq Hgj	LKSBM	Intermediate Government
N. Kvks Mhryd DB Mbs YvnhHfpg Fbhwwy	HFRHTH	Long Government
Xlsjwrcd Knmcy Lfrk Wrsxqp PG Ysk H	DNVP	Intermediate Core Bond
YwbvbfPvcq 4-1 Jbtv Jcnkwydn Ctxwgqg J/GWC	RZBHKK	Intermediate Government
YgmjrzZgfd 4-37 Tv Xvlg Xgky K/ZVDP	TLKXV	Long Government
XxkfbtTfqd Vsnbwwyc Dmfh Tryt Qtyj S	QPTY	Ultrashort Bond
WhvzzfTqwq Wxbg-Sztg Vdnk Bddb	GTQQ	Long Government
RndrdnNkyn YYNW Ylqcdsb J/SFXK	GYXGD	Inflation-Protected Bond
vQjdbmc KC Xdndqwkqcdjb Pbhszr Ldzw Hvzpb	WGPTZ	Intermediate Core Bond
zCxrggp WG Drxmxtbtnhkh Qns Wk Dbtghr	TDPQB	Intermediate Government
jFxptwz QN Fnrf Tsnhfgxtfv Wpls Xl	KQFH	Long Government
qPhlzjf WG Xtyzfrmdkql Qrcp Jdhnzx	WWGRQZ	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.