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Beware of Rate Risk in Passive Core Bond Funds

Passive core bond funds have some advantages, but don’t expect protection when interest rates rise.

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This article is part of Morningstar's Guide to Passive Investing special report.

Passive funds in the intermediate-term bond Morningstar Category come with a built-in safety net of low fees, typically clocking in at about 10 basis points, compared with a broad Morningstar Category median of 68 basis points. They also carry less credit risk than their typical competitors, making them reliable diversifiers during periods of credit stress.

Karin Anderson has a position in the following securities mentioned above: DODIX. Find out about Morningstar’s editorial policies.