6 Top-Performing Intermediate Core Bond Funds

Intermediate core bond funds often form the foundation of bond portfolios, and these top-rated funds offer some of the best options for investors. To screen for the top-performing funds in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. Offerings from JPMorgan stood out, taking up two of the six spots. All names that passed the screen were actively managed.

Intermediate Core Bond Funds Performance

• Fidelity Investment Grade Bond Fund FIKQX
• Guggenheim Core Bond Fund GIUSX
• JPMorgan Core Bond Fund JCBUX
• JPMorgan Mortgage-Backed Securities ETF JMTG
• Neuberger Berman Core Bond Fund NRCRX
• Vanguard Core Bond Fund VCOBX

Over the last 12 months, intermediate core bond funds have returned 2.83%. On an annualized rate, intermediate core bond funds have returned 2.04% over the last three years and lost 0.75% over the last five years. That compares with the Morningstar US Core Bond Index, which has returned 2.69% over the last 12 months, gained 1.97% per year over the last three years, and lost 0.94% per year over the last five years.

What Are Intermediate Core Bond Funds?

Intermediate-term core bond portfolios invest primarily in investment-grade US fixed-income issues, including government, corporate, and securitized debt, and they hold less than 5% in below-investment-grade exposures. Their durations (a measure of interest rate sensitivity) typically range between 75% and 125% of the three-year average of the effective duration of the Morningstar Core Bond Index.

Screening for the Top-Performing Intermediate Core Bond Funds

To find the best intermediate core bond funds, we looked at returns data from the past one, three, and five years using data available in Morningstar Direct. We screened for open-ended and exchange-traded funds in the top 33% of the category using their lowest-cost primary share classes for those periods. We also filtered for funds with Morningstar Medalist Ratings of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left six names.

Because the screen was created with the lowest-cost share class for each fund, some may be listed with share classes that are not accessible to individual investors outside of retirement plans, or they may be aimed at institutional investors and require large minimum investments. The individual investor versions of those funds may carry higher fees, reducing returns to shareholders. In addition, Medalist Ratings may differ among the share classes of a fund.

Fidelity Investment Grade Bond Fund

• Morningstar Medalist Rating: Gold
• Morningstar Rating: ★★★★

Over the past 12 months, the $10.4 billion fund has gained 3.10%, while the average fund in its category is up 2.83%. The Fidelity fund, launched in October 2018, has climbed 2.53% over the past three years and lost 0.35% over the past five years.

“Thoughtful succession planning helps to keep Fidelity Investment Grade Bond among the best core bond offerings. Fidelity’s core and core-plus-bond management team is still best-in-class as it continues to evolve. Its most recent evolution materialized in 2024’s fourth quarter when stalwart manager Jeffrey Moore retired, a departure well-telegraphed earlier in the year. Manager Michael Plage officially replaced Moore as this strategy’s lead, a logical move since Plage had been deeply involved in its day-to-day management alongside Moore since 2016. Fidelity added former securitized trader Brian Day to the core/core-plus management team as part of the firm’s longer-term plan to increase the manager cohort to five from four. Day and fellow rookie manager Stacie Ware—who also joined the strategy’s management roster in 2024—are part of the next generation of core/core-plus generalists for Fidelity.

“This management team also benefits from the strength of the firm’s broader fixed-income efforts: a deep analyst bench, sector-specific experts, and a cadre of dedicated quantitative risk specialists and traders. In addition to its core opportunity set of Treasuries, investment-grade corporate credit, and agency mortgages, the strategy may hold up to 10% in below-investment-grade debt, though exposure here has been 5% or less in recent years. Still, a persistent BBB corporate credit overweighting can provide volatility at times.”

—Max Curtin, analyst

Guggenheim Core Bond Fund

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★★

The $2.4 billion fund has climbed 4.08% over the past 12 months, outperforming the average fund in its category, which rose 2.83%. The Guggenheim fund, which launched in January 2013, has climbed 2.90% over the past three years and lost 0.13% over the past five years.

“CIO Anne Walsh and CIO of Fixed Income Steven Brown have kept in place the model designed by Walsh’s predecessor, Scott Minerd, who passed away in 2022. They manage Guggenheim Core Bond and related strategies along with Adam Bloch and Evan Serdensky. The team draws on a vast group of other managers and researchers, including more than 50 for corporate credit, in addition to sizable teams focused on macro, rates, and structured credit.

“The team operates within a distinctive framework developed with behavioral finance in mind. It segments decision-making among groups focused on sector research, macro research, portfolio construction, and portfolio management, and boasts a deliberate, slowed-down process to avoid mistakes. The size, depth, and quality of the work done by the corporate credit team, which rolls up to the analysis of many securitized issues, is a critical complement to the efforts of its 20-strong structured-credit group, as well.

“Their approach of exploiting inefficiencies among out-of-benchmark bonds has historically meant a large, eclectic mix of securitized fare. Although the fund carried 8.5% in collateralized loan obligations as of year-end 2024, reflecting a long stretch of derisking and trimming based on valuation decisions. For example, it had 37% in the sector as of March 2017. It held 1.5% in debt rated BB or lower at year-end 2024, down from 28% at the end of 2014. Overall, the strategy has produced peer-beating long-term returns and modest volatility, and neither cutting risk in 2018 and 2019 nor its 2022 weakness has tarnished that record.”

—Eric Jacobson, senior principal

JPMorgan Core Bond Fund

• Morningstar Medalist Rating: Gold
• Morningstar Rating: ★★★★

Over the past 12 months, the $50.5 billion JPMorgan Core Bond Fund rose 3.14%, while the average fund in its category rose 2.83%. The JPMorgan fund, which launched in February 2005, has climbed 2.59% over the past three years and lost 0.14% over the past five years.

“Veteran leadership, effective collaboration, a well-resourced common platform, and a consistent approach make JPMorgan Core Bond a top intermediate core bond offering. JPMorgan mainstay Rick Figuly leads the strategy and heads the US core bond team. He took the reins here in September 2015 and has worked on the strategy alongside another bond veteran, Justin Rucker, since March 2019. The team is one of the deepest among competitors. This was demonstrated when co-manager and US fixed-income CIO Steve Lear announced his retirement in March 2023, and the firm quickly added two proven investors to the roster. The team draws on JPMorgan’s vast global resources to help drive sector allocation and security selection, the foundation for this fund’s value-driven approach, including a long-standing bias to securitized debt of various structures and corporate bonds.

“The fund’s approach to managing these securitized stakes helps it stand out and typically makes up 40%-50% of assets. However, intense focus on positively convex structures, or those with more stable durations given changes in underlying yields, differs from most peers and the index, which features more plain-vanilla mortgage passthroughs or TBAs. The managers target specific characteristics in specified mortgage pools, collateralized mortgage obligations, nonagency mortgage-backed securities, and asset-backed securities. Rather than making big interest-rate bets, the team keeps overall duration within 10% of the Bloomberg US Aggregate Bond Index, but it also tries to exploit yield-curve opportunities.

“Consistent performance is a hallmark of the fund. Over Figuly’s tenure since October 2015 (his first full month), the US-domiciled R6 shares’ 2.0% annualized return through February 2024 beat the benchmark’s 1.6% and its unique intermediate core bond Morningstar Category’s median 1.7% gain. The fund has typically held up better than most peers in credit stress periods and consistently delivered strong results over shorter three- and five-year periods.”

—Paul Olmsted, senior analyst

JPMorgan Mortgage-Backed Securities ETF

• Morningstar Medalist Rating: Silver
• Morningstar Rating: ★★★★

Over the past 12 months, the $5.8 billion JPMorgan Mortgage-Backed Securities ETF rose 3.22%, while the average fund in its category rose 2.83%. The JPMorgan fund, which launched in August 2000, has climbed 2.71% over the past three years and gained 0.67% over the past five years.

“JPMorgan Mortgage-Backed Securities’ experienced securitized managers, disciplined process, and strong decisions make it a compelling option for investors. Firm veterans Rick Figuly, Andy Melchiorre, and Michael Sais have used their mortgage-backed securities expertise to generate impressive results. Their bottom-up efforts give them an edge against most rivals. Sais has run this fund since 2005, but Figuly (2015), the head of J.P. Morgan’s value-driven core bond team, and MBS specialist Andrew Melchiorre (2019) oversee the day-to-day management. It’s very much a team effort, though, with the managers’ fundamental research efforts. They also draw on additional MBS specialists and a growing eight-person securitized analyst group for ideas and ongoing monitoring.

“The strategy’s heavy MBS stakes differentiate it from intermediate core bond peers who typically manage to the Bloomberg US Aggregate Bond Index, which features a mix of Treasuries, investment-grade corporates, and agency MBS. The portfolio consists of agency residential and commercial MBS, typically accounting for 65%-80% of assets. This sets it apart from the typical peer, which has historically ranged between 25% and 30% for similar bonds.

“JP Morgan’s quarterly investment committee shapes the fund’s macro positioning. However, most of the work takes place in weekly sector meetings and daily interactions to inform portfolio construction. These value-driven managers employ rigorous fundamental analysis to evaluate various agency and nonagency MBS structures that meet their stringent standards, which identify bonds with favorable prepayment characteristics and good relative value.

“The strategy’s unique contours, including its absence of corporate bonds, can cause it to lag most rivals in periods of corporate bond stress, but its high-quality, mortgage-centric holdings give it a boost when credit is out of favor. This resiliency, as well as strong security selection, has paid off for investors. Over the trailing 10 years, the I shares’ 2.1% annualized return through August 2024 beat its distinct intermediate core bond rival’s 1.7% and the benchmark’s 1.6%. This top-decile result was even better when adjusting for volatility.”

—Paul Olmsted, senior analyst

Neuberger Berman Core Bond Fund

• Morningstar Medalist Rating: Bronze
• Morningstar Rating: ★★★★

Over the past 12 months, the $1.1 billion fund has gained 3.15%, while the average fund in its category is up 2.83%. The Neuberger Berman fund, which launched in January 2019, has climbed 2.35% over the past three years and lost 0.40% over the past five years.

“Neuberger Berman Core Bond’s diversified risk-taking and strong research capabilities command investor attention. This robust approach is built on collaboration. Analysts and sector managers work in tandem to forecast return distributions, a key component in the firm’s quantitative optimizer model. Comanagers have the final say on finalizing sector allocations (although they lean heavily on the model’s proposed optimal weightings), and analysts drive bottom-up security selection decisions.

“As is the case with most core bond mandates, this strategy often features healthy stakes in agency mortgage-backed securities, investment-grade credit, and Treasuries. These core holdings accounted for 80% of its December 2024 portfolio assets. The managers’ willingness to dabble in less frequently trodden areas of securitized debt, such as collateralized loan obligations and credit risk transfers, differentiates this strategy from more conservative peers. The strategy’s yield tends to clock in higher than its average intermediate core-bond Morningstar Category peers, in part thanks to these more adventurous stakes.

“The four comanagers involved in the day-to-day management here are all veterans of Neuberger Berman, despite varying tenures on the strategy. Global head of investment-grade David Brown and global head of rates Thanos Bardas have been named since 2008, while Nathan Kush and Olumide Owolabi were added in 2017 and 2023, respectively. All four have spent at least two decades at the firm. The co-managers draw from a large pool of researchers that has historically added value through bottom-up security selection.

“The strategy’s myriad risk buckets enable it to remain competitive across a variety of market environments and have proven to be a recipe for long-term success. Standout security selection within agency mortgages and investment-grade credit have been two notable contributors, helping lift the fund’s institutional shares in the top half of its peer group in five of the past six years.”

—Max Curtin, analyst

Vanguard Core Bond Fund

• Morningstar Medalist Rating: Bronze
• Morningstar Rating: ★★★★

Over the past 12 months, the $14.5 billion Vanguard Core Bond Fund rose 3.54%, while the average fund in its category rose 2.83%. The Vanguard fund, which launched in March 2016, has climbed 2.51% over the past three years and lost 0.48% over the past five years.

“Vanguard Core Bond Fund’s experienced team employs a value-driven approach that leverages its expertise. The fund’s integration of a top-down and bottom-up approach is not unique, but its structured process supports strong execution. The managers seek attractive relative value by shifting the portfolio’s allocations among Treasuries, securitized, corporate, and emerging-markets debt, incorporating the best ideas from various specialized sector teams.

“Vanguard’s senior investment and taxable strategy committee, which establishes macroeconomic scenarios, guides the strategy’s risk framework, focusing on duration, yield-curve shape, sector allocation, and sector outlook. Comanagers Brian Quigley and Dan Shaykevich implement the strategies’ guidelines while maintaining the flexibility to deviate when they identify sustained risks or opportunities. They are ultimately responsible for sector rotation and security selection, leveraging in-depth credit research from sector specialists and additional insights from the dedicated risk team. Comanager Arvind Narayanan and his team lead the investment-grade corporate sleeves of the portfolio, which typically consists of a quarter to a third of the assets. The team actively manages the portfolio’s duration but keeps that measure within half a year of the Bloomberg US Aggregate Float Adjusted Index.

“The fund’s seasoned managers average more than two decades of industry experience each. Quigley brings mortgage-backed securities and agency debt market expertise and has been named on this strategy since its March 2016 inception. He co-leads this strategy alongside Shaykevich, who is co-head of the emerging-markets and sovereign-debt team. Shaykevich joined the team in 2018 after the former manager’s retirement, and Narayanan joined Vanguard in 2019 from State Street Global. As with other Vanguard fixed-income strategies, this one benefits from access to robust firmwide resources. The management team, however, balances numerous responsibilities, which could challenge its focus on this strategy.

“The fund has delivered strong long-term results, consistently outperforming most intermediate core bond Morningstar Category peers. Since April 2016, Quigley’s first full month managing the fund, the 1.8% annualized gain on the Admiral share class through November 2024 ranked in the category’s top quartile. While the strategy will experience underperformance periodically—in 2022’s rate-driven selloff, the strategy fell behind half of its peers partly because of its longer duration stance—its value-driven approach, combined with robust risk management, positions it to deliver solid results for patient investors.”

—Ken Noguchi, associate analyst