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Commentary

Which U.S. Bond Funds Beat Their Benchmarks by the Widest Margin?

Our screens reveal a select list of taxable-bond funds that have achieved long-term excess returns.

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The ranks of bond funds that have been able to beat the market over the long term are small.

Take the data from the most recent Morningstar Active/Passive Barometer, which compares actively managed funds against comparable index-tracking funds. Among intermediate core bond funds--a basic building block for most portfolios--barely half of the funds in the Morningstar Category have made it to their fifth birthday, and only one third that were around 10 years ago are still in existence. And of that group, fewer than one fourth of intermediate core bond funds have beaten their average passive counterpart.

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David Carey does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.