The Goldilocks of Bond Funds

Russ Kinnel: Fidelity Total Bond is a fund that I'd view as somewhere in between PIMCO Total Return on the one hand and Vanguard Total Bond Market Index on the other hand. It's an intermediate bond fund. It's not quite as bold as PIMCO Total Return, but it's also not passive, like the Vanguard fund.

Ford O'Neill has built a great record; that's why it's a Gold-rated fund. It's beaten both the index and its peers since he took over in '04. But what's interesting is, he doesn't try to make duration bets. This isn't a fund you should buy if you are looking for a fund that's going to be really short on duration when interest rates spike, or something like that. It pegs duration right at the benchmark.

But O'Neill has flexibility when it comes to sector exposure and credit risk. He typically will take greater credit risk, he might put money in emerging markets, he'll have less in mortgages. So, it's a fairly bold fund, but not as aggressive as a Total Return, and certainly not as aggressive as an unconstrained or a multisector fund.

Year-to-year, typically returns are within maybe 1% of the index, so not huge variations, but enough to add value. The fund has about $15 billion in assets, so it can do a little bit more with security selection than a PIMCO Total Return can do.

It's a nice steady fund, a little more aggressive than your typical core bond fund. It's a good choice.