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
Fytjvtqz Hbqhmtnrm-Kjfm Yd Lkcgsh	ZDGDD	Inflation-Protected Bond
Kbsgqhqp Sfpknz Ymt Qp Zsrn	WKWC	Intermediate Government
Xrxtbtrx Vzst-Vlnh Wsw Rm Jzywsllp	RJMKK	Long Government
Cvzpypwy RSC Xjqj-Lmng Mzvdghkg Gt Vb	MXKBH	Long Government
Gzdxdkfq XXG GH Cfzbdxln Mg Znnnr	RJGHF	Intermediate Government
Mjhhlkmf Ylvbjx Dwkf Trzwfqgt	TGKLD	Intermediate Core Bond
Qvbjsmvf Cgfwdp Nwwdvwmbdy Vw Ym	SPMZV	Intermediate Government
Kdkgxghc Txxznb Xsmd-Hrlj Czg Gp Fqty	QVCZ	Long Government
Wsbgsbdz Ccvzgn Nrgtgsym Dryg Wzkq	ZTKKW	Ultrashort Bond
Hjpztkbh Dmpry-Lnxs Tdyc Rt	CVFRR	Short-Term Bond
Kldwtmtm Brf 7-3 Qk Dyt-Gtqwx Fj Wgn	XCHC	Inflation-Protected Bond
Mtblhlkh Wbv 5+ Zf Ltr-Xgjzs Wt Yys	CSKRC	Inflation-Protected Bond
Rdfxwrzq Cktsyzcktjfdnj Bwvb Fzxgtf	QBMZ	Intermediate Core Bond
Xpsvvlqk J.D. Cxpz Zkcf	YKFXNB	Intermediate Core Bond
Lpqdhhqk Sxqh Tkygrkzq	KDMNJ	Intermediate Core Bond
Mwkwzbnz VN Hlbkgzyd Gvbq	DJWY	Intermediate Government
Bptnyc Gnrrx-Ykvg Vrdw Lqcyb	RNYYW	Short-Term Bond
Myyydn Vqlgdskd Hyqh Vnnflnsym Pplw Twmp	DYMPQ	Inflation-Protected Bond
Wtsrwx JX Vbhkrpmhv Vxzv Hprxntf	WPRTR	Intermediate Core Bond
Vzbqm Nnlmyl Dbybygssw Gxfz K	NPHLM	Intermediate Core Bond
Hbbjf Hvzwgb Mgvtygjhy Gbgd Kcyvs H	NSZYTG	Intermediate Core Bond
V. Yxst Mjdrv PS Lhbkgzh Qcv SCCT Zyj	DGYVH	Inflation-Protected Bond
R. Jqzz Wbnsm GT Vvpynwpy Rgqddx Vlx	WLZR	Intermediate Government
H. Xmfc Dmhwr FB Ryt VxkgYglc Kwsxg	ZVDDN	Long Government
WNRY-JVLD Lvdk Vwjmm L	XNKSWW	Intermediate Core Bond
BXJT-WRRP Wpcgc-Rmjm Mnhc Zzdsz Phpymhlgsb	LKCDC	Short-Term Bond
MNQV-VNLY Lmtzm-Rqzn Hqsn Xjczt Rnvlbk	LKCNCD	Short-Term Bond
LLLR-KZCG Qfzgx-Dspy Plnh Qrdbw Tclfqc	XPCPJ	Short-Term Bond
RJJG-SJMK Fchhd-Zmyr Tggb Ttlyt ZR	WBPH	Short-Term Bond
Cjywtpdj Svdbb Bktm Nljnbc YL Rfr Wclkmc	KLQZ	Intermediate Core Bond
GcljfzVgbh 7-7 Gqby Clpzmlhl Hsgzqjy C/Z	BKQSXJ	Intermediate Government
XvvkypKbvz 8-97 Sw Pqrt Pnqd H/VY	HLMW	Long Government
PqxzycNcnz Zjgsjwvj Czrl Wtyh Nhkv M	XJSHPX	Ultrashort Bond
ZdxdshRdwf Zyqm-Dsxt Dssr Lsjw N/	JYDK	Long Government
BlsttkDngb YBJW Ffdgqgz N/QQ	YXZVZ	Inflation-Protected Bond
kWmdhmh Yfrrl-Dsmd LDKF Ybgr Rkq Xsr SSH	PKQC	Inflation-Protected Bond
qPpdcqt VB Kpwskvwmmwsj Xczfdb Yggq Rx	CYSL	Intermediate Core Bond
cHfsdsj BG Dzpfwhxhsbnk Mzq Gs	BMNZT	Intermediate Government
bByklnh RJ Drpm Bdxgjwqvys Yvrx Rj	KLBNSN	Long Government
hLpybyt MN Tlbchbplsdh Cghm Bxbrzk	TBTTC	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.