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The Year in Bond Funds 2019

Closing out the decade with a bang.

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This past year was one of the best since the financial crisis for fixed-income returns. The year started with a significant dovish shift in Federal Reserve policy, which led to increased demand for both interest-rate and credit risk. Because of the Fed’s pause, followed by rate cuts in the second half of the year, the environment remained supportive throughout 2019.

Every bond fund Morningstar Category had positive returns in 2019, led by the 19.3% average return on long-term bond funds, while the worst-performing category (ultrashort bond) still posted a respectable average return of 3.1%. The Bloomberg Barclays U.S. Aggregate Bond Index, a proxy for typical U.S. core bond exposure, returned 8.7%, its best year since the financial crisis.

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Brian Moriarty does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.