3 Funds That Are Not Duration-Shy

Duration has been a dirty word for investors since 2021, for understandable reasons. Interest rates wobbled in 2021 and then surged in 2022, leading to some of the worst intermediate- and long-term bond fund losses in history.

Rates faltered again in 2023 and 2024, with intermediate- and long-term bond fund returns ranging from moderately positive to decidedly negative depending on their average duration and active bets along the Treasury curve. For example, betting that the two-year Treasury note would appreciate while the 10-year Treasury bond would depreciate resulted in very different performance from the opposite bet, even if the average duration in both cases was the same.

Since 2020, the only true bright spot for duration-sensitive funds was 2025, when the average fund in the intermediate core-plus bond Morningstar Category gained 7.3%. While falling interest rates did drive some of that return, so did falling interest rate volatility. The bond market thought it had a handle on politics and the business cycle, reducing the jitters that had plagued it since 2021. This decreased the volatility of interest rates, allowing the typically higher coupons of longer maturity bonds to do the heavy lifting and drive returns, especially in assets like agency mortgage-backed securities.

Of course, the reprieve didn’t last. Interest rates rose in 2026 after the Iran war began in February and sparked fears that the conflict would cause higher oil prices and, therefore, higher inflation.

Despite this backdrop, many active bond managers covered by Morningstar analysts have expressed the opinion that duration is more attractive today than it has been in many years, driven by higher coupons that should soften any inflation surprises.

For long-term investors, duration should continue to act as a ballast to an equity portfolio outside of inflation-driven shocks. Here are three funds run by good managers who aren’t afraid of a little rate risk.

Vanguard Long-Term Investment-Grade VWETX is a truly long-term fund with a duration of 12 years, so it isn’t for short- or even medium-term investment horizons. That comes with plenty of risks—the fund lost 25.6% in 2022—but it’s also a cheap way to add duration to a diversified portfolio. It’s run by capable managers executing a disciplined process, which is especially important in the volatile long-term bond markets.

Pimco Total Return PTTRX suffered the curse of mediocrity before returning to form in 2025, posting a 9.3% gain that beat every one of its intermediate core-plus bond rivals. Its 6.9-year duration is one year longer than the average peer’s, which means it may suffer if inflation rises faster than expected. But its skilled leaders have so far managed through recent rate volatility with poise.

JPMorgan Core Bond PGBOX is a tamer choice than the preceding funds but will capably fill the role of portfolio diversifier. It boasts a 6.2-year duration, only a touch longer than its typical peer in the intermediate core bond category, and the typical lack of high-yield bonds’ excessive credit risk won’t muddy the returns. It has stood out for its consistency in good times and bad.

This article first appeared in the July 2026 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.