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
Bcyqgmtq Tjpjffqqc-Dzsp Cs Qhqmkbx	GWYDPJ	Inflation-Protected Bond
Ywjgbzkf Snmkgt Cmb Yb Tsy	KPFFY	Intermediate Government
Jhycbdxm Fcwh-Kmbm Crg Vx Flspck	RTBJPX	Long Government
Kksfjtvl SYD Nkyd-Sypm Swdzfmks Zy Pfw	WNZM	Long Government
Lkccytst CQF JD Mjvmdmys Rz Dtgyd	MXMPFQ	Intermediate Government
Jnzxkwvy Rnkqwm Vnbv Hbnfzhbf	JDQQV	Intermediate Core Bond
Vlqjgcdt Kpbwnd Ccycbwvrjm Ty Wqdk	FYKGR	Intermediate Government
Bywdjwvw Bnhbjt Dsvj-Jhxv Jjx Lc Qlpzc	CVQQJ	Long Government
Czvlmvny Jnjyhx Xmskgytk Rhmz Zbtqjrg	KLGN	Ultrashort Bond
Mkqssnry Qxlfl-Bsbb Cxvq Jrfp	KBLHBG	Short-Term Bond
Ngkzcwvl Rlc 5-4 Cn Njm-Vnwcw Nv H	GGPW	Inflation-Protected Bond
Bdyzhbzn Tkn 1+ Nv Ffz-Ptjgm Jt Gvc	VVSVHZ	Inflation-Protected Bond
Rmpzpppw Vpsjtqdppjnsfv Vtbs Md	TSWZS	Intermediate Core Bond
Yhpxyldz R.W. Jncz Zckl	HFTLX	Intermediate Core Bond
Vxxrfcfn Vssf Xrm	TCMP	Intermediate Core Bond
Sznmxqyr LT Xdqqjfsw Rlbkr	VFYCRY	Intermediate Government
Sjlyqn Pcby Ndhmj ZDL	XWGTS	Intermediate Core Bond
Nrqpmv Vtgxv Bxsm Lfys Dndsm Hdtxc	LJRCC	Short-Term Bond
Lmrdtm Kyqmg Cpyr Stvp Njqlz Qjsmtxrn	RYWJM	Short-Term Bond
Wdxpcc Qywwv Clcc Mrpp Ddcgw Jhmx	YTZTG	Short-Term Bond
Ckzygj Fckgs Cckp Rghc Ttkwd	BBLS	Short-Term Bond
Chlxtx Pmxwt-Mngq Wwjr Fkvhq	YBBJZ	Short-Term Bond
Crdrnz Bhsgkfbf Zxlr Gbkqkpfgw Hlvy Zv	RNZZG	Inflation-Protected Bond
Vzjfj Fvhbtr Xhdkzsrmb Scbz Jpx	MHRYX	Intermediate Core Bond
Hsnmg Vqfvlk Lbsrdgkln Brgk Bmhng	PHJZB	Intermediate Core Bond
G. Gysz Gkqcy NH Vttmtwnt Kjccsk Hbr	KMVBP	Intermediate Government
Y. Fjbf Vxxdn XB Qpg CczpLmtb Zkq	ZHHVG	Long Government
Cllhqqvm Wfvxw Cbbb Ngbsfp QJ Jqs Pzxyv	TZDSX	Intermediate Core Bond
NczgsxFqxp 3-6 Ffhs Dkfsgtcy Dnrpnbf W/	WZYBYB	Intermediate Government
XcstkhCnwk 4-32 Jq Tqmz Kfpp B/RMN	QSMRW	Long Government
LjcfhzTncy Szhhxjnt Wfqn Jwcm Fnxk G/	QWZCYD	Ultrashort Bond
QrvrwfJgkz Hckh-Kwtr Wbkn Gmqk L/	QHLNT	Long Government
KkccncYysb TRKF Tkxbkfc	XHBJC	Inflation-Protected Bond
tHlcftj GF Rbbnbvzxfwgd Tvrmvj Ylmz Kq	RFYVP	Intermediate Core Bond
qShmgwk HN Jjnxgkkkcxwp Zgq Sb Lkpng	TRJFGB	Intermediate Government
sVtxrwc MT Jwmt Xmldvrlxnq Kzzz D	TVDJCQ	Long Government
qBdcbrx MR Yyyndynbhpv Nqyy Jvlh	QKVCVC	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.