The Intermediate-Term Bond Category Is a Big Tent
Know what to expect from your intermediate-term bond fund.
As the third-largest U.S. fund category, the intermediate-term bond Morningstar Category sprawls across more than 300 funds and counts $1.4 trillion in assets. The size of the group reflects the essential role that intermediate-term bond funds often play in investor portfolios. Funds in this category invest primarily in investment-grade bonds and keep their durations--a measure of interest-rate sensitivity--in the intermediate-term range. They offer a moderate dose of interest-rate risk and should hold up reasonably well when equity markets suffer losses driven by other factors.
That said, this group is diverse. Some funds in the category hew closely to the investment-grade-only Bloomberg Barclays U.S. Aggregate Bond Index. They often hold large stakes in U.S. Treasuries and agency mortgages as well as investment-grade corporates. Other more adventurous funds take on an extra helping of credit risk, investing meaningfully in junk bonds and/or leveraged bank loans. Some of these funds also venture abroad to buy the debt of developed- and developing-markets countries or companies that issue in these markets; a subset adds exposure to non-U.S. currencies to the mix. Meanwhile, a smaller subgroup invests the bulk of its assets in mortgage-backed and other securitized debt, sectors that include government-backed agency fare as well as private-label debt that can expose investors to losses if borrowers don't pay their loans on time.
Sarah Bush does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.