The Best Bond Funds
The US bond market is having a good year: The Morningstar US Core Bond Index was up nearly 5% during the first quarter of 2025. “Unsettled by the DeepSeek AI disruption, major policy uncertainty around tariffs, and fears of ‘stagflation,’ investors took a risk-off approach to the markets during the quarter,” explains Morningstar Indexes strategist Dan Lefkovitz.
What’s next for bonds?
“Morningstar’s US economics team projects that the Fed will continue to ease monetary policy throughout 2025 by lowering the federal-funds rate throughout the year, reaching a range of 3.25%-3.50% at the end of 2025,” reports Morningstar senior US market strategist Dave Sekera. “We continue to think investors will be best served in longer-duration bonds and capturing the high yield carry along with potential future price appreciation, as our US economics team forecasts a multiyear period of declining yields.”
Regardless of where interest rates and bond yields are headed, there’s a case to be made for holding bond funds in your portfolio. One of the biggest reasons to do so is that bonds are still less risky over the long term than stocks.
Are Bond Funds a Good Investment?
Investors rely on bonds for many reasons: funding short-term goals, diversifying a stock-heavy portfolio over the long term, or generating income during retirement, to name a few. Before getting down to choosing a bond mutual fund or exchange-traded fund, step back and consider why you need one: What role will a bond fund play for you?
Once you know the need it’s filling, figure out whether a taxable-bond fund or municipal-bond fund is a better choice for you. If you’re investing via a tax-deferred account like an IRA or 401(k), a taxable-bond fund will be the better match. If you’re investing in a taxable account, a fund that buys municipal bonds might be the better choice on an aftertax basis.
A good place to start your search for the best bond funds to buy—both taxable and municipal alike—is with the Morningstar Medalist Rating. Mutual funds and ETFs that earn our highest rating of Gold are those that we think are most likely to outperform over a full market cycle.
The 66 Best Bond Funds to Buy
These ETFs and mutual funds all land in one of the bond Morningstar Categories and have at least one share class that earns our top Medalist Rating of Gold with 100% analyst coverage as of April 1, 2025.
- American Funds Bond Fund of America ABNFX
- American Funds Limited-Term Tax-Exempt Bond LTEFX
- American Funds Mortgage MFAFX
- American Funds Tax-Exempt Bond TEAFX
- American Funds Tax-Exempt Fund of California TEFEX
- American Funds Tax-Exempt Preservation Portfolio TYEFX
- American Funds US Government Securities GVTFX
- American High-Income Municipal Bond AMHIX
- Artisan High Income ARTFX
- Baird Aggregate Bond BAGIX
- Baird Core Plus Bond BCOSX
- Baird Short-Term Bond BSBSX
- Baird Ultra-Short Bond Investor BUBSX
- BlackRock High Yield Bond/iShares High Yield Active ETF BHYIX BRHY
- BlackRock Strategic Global Bond MAWIX
- BlackRock Strategic Income Opportunities BASIX
- BlackRock/iShares Total Return MDHQX BRTR
- BrandywineGLOBAL Corporate Credit Fund BCAAX
- BrandywineGLOBAL High Yield Fund BGHIX
- Dodge & Cox Global Bond DOXLX
- Dodge & Cox Income DOXIX
- Fidelity Floating Rate High Income FFRHX
- Fidelity Investment Grade Bond FBNDX
- Fidelity Tax-Free Bond FTABX
- Fidelity Total Bond/ETF FTBFX FBND
- FPA Flexible Fixed Income FPFIX
- Hartford Strategic Income/ETF HSNFX HSUN
- iShares Core Total USD Bond Market ETF IUSB
- iShares Core US Aggregate Bond ETF AGG
- iShares Short-Term TIPS Bond Index BKIPX
- JP Morgan Income/ETF JMSIX JPIE
- JPMorgan Limited Duration Bond ETF JPLD
- Loomis Sayles Core Plus Bond NEFRX
- Muzinich Credit Opportunities MZCIX
- PGIM High Yield PHYZX
- PGIM Short Duration Multi-Sector Bond/ETF SDMZX PSDM
- Pimco Diversified Income PDIIX
- Pimco Enhanced Short Maturity Active ETF MINT
- Pimco Enhanced Short Maturity Active ESG ETF EMNT
- Pimco Global Bond Opportunities (US-Hedged) PGBIX
- Pimco GNMA and Government Securities PDMIX
- Pimco Income PIMIX
- Pimco International Bond PFUIX PFORX
- Pimco Short Asset Investment PAIDX
- Pimco Total Return PTTAX
- Schwab Short-Term US Treasury ETF SCHO
- Schwab US Aggregate Bond ETF SCHZ
- Schwab US TIPS ETF SCHP
- SPDR Portfolio Aggregate Bond ETF SPAB
- SPDR Portfolio Short-Term Treasury ETF SPTS
- State Street Aggregate Bond SSAFX
- T. Rowe Price Floating Rate/ETF TFAIX TFLR
- Vanguard California Intermediate-Term Tax-Exempt VCADX
- Vanguard California Long-Term Tax-Exempt VCLAX
- Vanguard High-Yield Tax-Exempt VWALX
- Vanguard Intermediate-Term Corporate Bond Index/ETF VICSX VCIT
- Vanguard Intermediate-Term Tax-Exempt VWIUX
- Vanguard Long-Term Corporate Bond Index/ETF VLTCX VCLT
- Vanguard Long-Term Tax-Exempt VWLUX
- Vanguard Limited-Term Tax-Exempt VMLUX
- Vanguard Short-Term Corporate Bond Index/ETF VSCSX VCSH
- Vanguard Short-Term Inflation-Protected Securities Index/ETF VTAPX VTIP
- Vanguard Short-Term Treasury Index/ETF VSBSX VGSH
- Vanguard Tax-Exempt Bond ETF VTEB
- Vanguard Total Bond Market Index/ETF VBTIX BND
- Vanguard Ultra Short-term Tax-Exempt VWSUX
The list of the best bond funds covers a hodgepodge of investment styles. It includes bond funds focusing on fixed-income securities with different maturities and credit qualities and features both taxable-bond funds and municipal-bond funds. It encompasses the best bond index funds and the best actively managed options, too. Morningstar portfolio strategist Amy Arnott suggests in her Role in Portfolio framework that investors stick with short- and intermediate-term bond funds as core holdings in their portfolios. Bond funds that focus exclusively on certain other types of securities—such as corporate bonds, international bonds, long-term bonds, high-yield bonds, and so on—should play more limited roles in a portfolio.
Morningstar Investor members can learn more about each of these bond funds by reviewing their Analyst Reports.
More of the Best ETFs to Buy
What Is a Taxable-Bond Fund?
Taxable-bond ETFs and mutual funds invest in fixed-income securities issued by governments and corporations.
The “right” type of taxable-bond fund for you comes down to personal preferences. Will you forgo the incremental yield and diversification benefits that high-quality long-term bond funds typically offer for some protection against rising interest rates? Do you want to stick with the highest-quality bonds you can find, or are you willing to delve into lower-quality bonds in exchange for higher yields? Will you dabble in world bonds for yield pickup—and if yes, do you want currencies in the mix?
How to Use Municipal Bonds in a Portfolio
Some investors can improve their aftertax returns with munis.
On the surface, municipal bonds appear to yield less than taxable bonds of similar quality and maturity—but that’s before taxes are taken into consideration. How can you determine whether municipal bonds are a good choice for you? Use a tax-equivalent yield calculator to see how a given municipal-bond ETF or mutual fund’s yield compares with the yield of a similar maturity and quality taxable-bond ETF or mutual fund, given your particular tax circumstances.
