Intermediate-Term Bond Funds: An Anchor for Your Portfolio
Sarah Bush examines some differences in the category with core funds and core-plus funds.
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Mentioned: Dodge & Cox Income (DODIX)
, PIMCO Total Return Instl (PTTRX)
, Vanguard Total Bond Market Index Inv (VBMFX)
, Western Asset Core Plus Bond I (WACPX)
, Metropolitan West Total Return Bd M (MWTRX)
, Baird Aggregate Bond Inv (BAGSX)
, Wells Fargo Core Bond Inst (MBFIX)
, Fidelity® Total Bond Fund (FTBFX)
Sarah Bush: The intermediate-term bond Morningstar Category is the largest bond category and home to more than 300 funds. The funds in the category are generally well-diversified options, focused on higher quality bonds. They provide a good anchor for an investor's bond portfolio and can provide valuable diversification from the equity markets.
That said, not all intermediate-term bond funds are created equal. Some funds stick entirely or almost entirely to bonds with investment-grade credit ratings. Morningstar Medalists in this group--which are often called core funds--include Silver-rated Vanguard Total Bond Market Index, which tracks the investment grade-only Bloomberg Barclays Aggregate Bond Index. Active funds including Silver-rated Baird Aggregate Bond and Silver-rated Wells Fargo Core Bond also fit the bill.
Sarah Bush does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.