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Fund Spy

8 Great Core Bond Funds

These intermediate-term taxable-bond funds earn Morningstar Analyst Ratings of Gold.

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Last week, we published a checklist for taxable-bond-fund investors. In it, we suggested that investors select intermediate-term bond funds for the core of their fixed-income allocations. By dedicating a sizable chunk of your fixed-income allocation in such funds, your portfolio will be better positioned to withstand bond-market shocks from interest-rate increases or credit-quality scares. Plus, you'll get the diversification benefits that bonds can offer an equity-heavy portfolio.

Investors who want funds that own only the highest-quality intermediate-term credits can focus their efforts on funds in the intermediate-government Morningstar Category. Those willing to include corporate bonds and other fare in addition to governments can survey the intermediate-term bond category. "I personally prefer the latitude you see in the intermediate-term bond category, because it offers more diversification," says Morningstar director of personal finance Christine Benz.

Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.