Intermediate-Term Bond Funds: An Anchor for Your Portfolio
Sarah Bush examines some differences in the category with core funds and core-plus funds.
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 (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.