12 Best Bond Index Funds: Morningstar

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Bond index funds are gaining popularity among investors, as are those focused on stocks, Morningstar’s investment specialist Susan Dziubinski wrote in a recent blog post. This is because of the widespread perception that buying and holding the broad market, whatever that market may be, produces better results than trying to beat the same market by actively selecting securities.

Dziubinski noted that Morningstar research has shown that in many investment categories, index funds have outperformed active ones over time. The best ones, she wrote, closely track their indexes, minimize costs and follow sensible rules-based indexes.

Bond investors should consider their time horizons, Dziubinski wrote, suggesting investors looking three to five years ahead should consider short-term bond funds, while those looking six or more years into the future might opt for intermediate-term funds.

“Those investors with longer time horizons might consider a longer-term bond fund,” she writes, “but they should also be prepared for the enhanced volatility that comes with investing in long-term bonds.”

See the gallery for 12 mutual funds and ETFs that all land in one of the broad bond categories, earn the top Morningstar Medalist Rating of Gold and have Analyst Assigned percent — a measure of the involvement of analsyts in dertermining individual ratings — equaling at least 80% as of Sept. 26.

Slides: Credit: Chris Nicholls/ALM