4 Top-Performing Corporate Bond Funds

Corporate bond exchange-traded funds can be an easy and inexpensive way for investors to access a broad, diversified portfolio of bonds that would be hard for individual investors to assemble.

To screen for the top-performing funds in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. Offerings from Vanguard stood out, taking up two of the four funds.

• iShares 5-10 Year Investment Grade Corporate Bond ETF IGIB
• SPDR Portfolio Intermediate Term Corporate Bond ETF SPIB
• Vanguard Intermediate-Term Corporate Bond Index Fund VCIT
• Vanguard Intermediate-Term Investment Grade Fund VFIDX

Corporate Bond Funds Performance

Over the last 12 months, corporate bond funds have returned 5.48%. On an annualized rate, they have returned 3.96% over the last three years and 0.05% over the last five years. That compares with the Morningstar US Core Bond Index, which has returned 4.30% over the last 12 months, gained 2.08% per year over the last three years, and lost 1.04% per year over the last five years.

What Are Corporate Bond Funds?

Corporate bond portfolios concentrate on investment-grade bonds issued by corporations in US dollars, which tend to have more credit risk than government- or agency-backed bonds. These portfolios hold more than 65% of their assets in corporate debt, less than 40% in non-US debt, and less than 35% in below-investment-grade debt. Their durations typically range at 75%-150% of the three-year average of the effective duration of the Morningstar Core Bond Index.

Screening for the Top-Performing Corporate Bond Funds

We looked at returns data from the past one, three, and five years using data in Morningstar Direct. We screened for open-ended and exchange-traded funds in the top 33% of the category using their lowest-cost primary share classes. We also filtered for funds with Medalist Ratings of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left four names.

Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among the share classes of a fund.

iShares 5-10 Year Investment Grade Corporate Bond ETF

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★

Over the past 12 months, the $15.5 billion iShares 5-10 Year Investment Grade Corporate Bond ETF rose 7.07%, while the average fund in its category rose 5.48%. The fund, launched in January 2007, has climbed 5.08% over the past three years and 0.67% over the past five.

“iShares 5-10 Year Investment Grade Corporate Bond ETF provides broadly diversified exposure to intermediate-term investment-grade corporate bonds at an attractive price tag. Its 5-to-10-year maturity bucket is more specific than many category peers, but the fund will be a handy building block for an investor’s portfolio. The fund tracks the ICE BofA 5-10 Year US Corporate Index. The index captures investment-grade, US-dollar-denominated corporate bonds with between five and 10 years remaining until maturity.

“The fund’s duration tends to be slightly shorter than that of the category average. Peers in the corporate bond Morningstar Category tend to cast a wider net than the fund, and many capture the full maturity spectrum. Their average duration has increased in the past decade, a reflection of issuance activities during the zero-interest-rate environment. This trend has slowly reversed as interest rates rose from their historic lows and companies have issued fewer long-term bonds. Still, the fund’s duration tilt can differentiate its category-relative performance when interest rates move.

“Despite its shorter duration, this fund’s exclusion of short-term bonds can still have an impact on performance. This fund can underperform category peers during extreme market stress when investors prefer short-term bonds. Nonetheless, the fund has behaved as expected given its maturity exposure, and its modular construction should provide investors with more precision in building their portfolio allocation. The fund’s credit risk profile and performance during major credit shocks have been similar to the category average.”

—Lan Anh Tran, analyst

SPDR Portfolio Intermediate Term Corporate Bond ETF

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★★

The $10.5 billion fund has climbed 6.66% over the past 12 months, outperforming the average fund in its category, which rose 5.48%. The State Street fund, launched in February 2009, has climbed 4.76% over the past three years and 1.24% over the past five.

“SPDR Portfolio Intermediate Term Corporate Bond ETF’s well-constructed portfolio, low fee, and broad scope make it a compelling choice. The fund’s shorter duration and slight quality tilt also shield it from major interest rate and credit shocks. The fund tracks the Bloomberg US Intermediate Corporate Bond Index, which captures investment-grade corporate bonds with one to 10 years remaining to maturity. The index excludes riskier types of bonds such as floating-rate notes, contingent capital securities, and bonds with equity features.

“The fund excludes long-term bonds, resulting in a shorter duration compared with the average category peer. Its average duration often trails that of the category average by around 2.0 years, standing at 4.1 years as of May 2025. This means the fund weathers major interest rate shocks much better than most.

“Similar to other broad and market-value-weighted passive funds in the category, the fund has a slightly more conservative credit profile than its actively managed peers. Many active managers reach into the first rung of junk bonds to find incremental opportunities. The fund leans toward higher-quality bonds instead, overweighting A rated bonds by 10 percentage points compared with the average peer.

“Lower volatility and superior performance during stressed markets are this fund’s strengths, even if it might miss out when long-term bond yields fall or when the Federal Reserve cuts interest rates. Long-term risk-adjusted performance, measured by the Sharpe ratio, tends to be comparable with the category average, even if short-term returns diverge. Still, the fund’s low fee and conservative risk profile make it a sound portfolio building block.”

—Lan Anh Tran

Vanguard Intermediate-Term Corporate Bond Index Fund

• Morningstar Medalist Rating: Gold
• Morningstar Rating: ★★★★★

Over the past 12 months, this $57 billion fund has gained 6.90%, while the average fund in its category is up 5.48%. The Vanguard fund, launched in November 2009, has climbed 4.75% over the past three years and 0.50% over the past five.

“Vanguard Intermediate-Term Corporate Bond offers an inexpensive and well-constructed portfolio of investment-grade corporate bonds set to mature in five to 10 years. The Bloomberg US 5-10 Year Corporate Bond Index, which underpins this fund, sweeps in investment-grade corporate bonds with five to 10 years remaining to maturity. The index excludes riskier types of bonds such as floating-rate notes, contingent capital securities, and bonds with equity features.

“The fund tends to overweight higher-quality bonds compared to its average Morningstar Category peer. It parked more than 40% of its assets in A rated bonds as of May 2025, 10 percentage points more than the category average. More flexible active category peers often take on a small position in high-yield bonds instead in their quest to add incremental value. Bypassing riskier bonds has helped this fund better protect against widening credit spreads during credit shocks. Nonetheless, over half of the fund’s portfolio carries BBB credit ratings, in line with the category average and other broad passive category peers. The fund’s more conservative credit risk profile might miss out on some upside when credit spreads tighten, but it should still participate in most rallies. Its intermediate-term remit slightly skews its duration to the shorter side of its category. As of May 2025, its average duration stood at 6.1 years compared with 6.5 years for the category average.

“The fund remains a precise tool for investors targeting high-quality, intermediate-term corporate bonds. Its low fee should preserve its performance edge over the long run. The ETF share class has beaten the category average by 39 basis points between its 2009 inception and May 2025.”

—Lan Anh Tran

Vanguard Intermediate-Term Investment Grade Fund

• Morningstar Medalist Rating: Bronze
• Morningstar Rating: ★★★★

Over the past 12 months, the $36.5 billion Vanguard Intermediate-Term Investment Grade Fund rose 6.90%, while the average fund in its category rose 5.48%. The fund, launched in February 2001, has climbed 4.76% over the past three years and 0.55% over the past five.

“Lead manager Arvind Narayanan and comanager Dan Shaykevich collaborate with investment-grade specialists and the risk team to allocate risk within guidelines and refine portfolio construction. The strategy’s credit profile began to shift a few months after Narayanan’s tenure began in late 2019. While the team keeps BBB exposure within 10 percentage points of its Bloomberg US Credit 5 to 10 Year Index, the fund increased its BBB weighting nearly threefold between the first quarters of 2020 and 2022, and that stake now typically accounts for about half of the portfolio’s assets, in line with the category median.

“Exposure to junk bonds also increased over the same period and has been modestly above the category median in recent years. Even if the fund maintains a relatively hefty stake in AAA debt, including US government bonds, the portfolio is now more sensitive to changes in option-adjusted credit spreads than in the past. Moderate interest-rate sensitivity (as measured by duration) compared with most rivals remains a feature of the portfolio. At year-end 2024, for example, the fund’s roughly 6.0-year duration was 0.7 years shorter than the category median.

“When credit spreads widen, interest rates typically fall. In an environment like that, the fund’s greater credit sensitivity and below-median interest-rate sensitivity would both act as comparative headwinds. The fund needs to prove it can navigate such an environment and still come out ahead.”

—Ken Noguchi, associate analyst