7 Top-Performing Intermediate Core Bond Funds

Intermediate core bond funds can form the centerpiece of a fixed-income portfolio. 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. All names that passed the screen were actively managed.

Intermediate Core Bond Funds Performance

• Baird Aggregate Bond Fund BAGIX
• Fidelity Investment Grade Bond Fund FIKQX
• Guggenheim Core Bond Fund GIUSX
• John Hancock Investment Grade Bond Fund JIGEX
• JPMorgan Core Bond Fund JCBUX
• Neuberger Berman Core Bond Fund NRCRX
• Vanguard Core Bond Fund VCOBX

Over the last 12 months, the intermediate core bond category has returned 6.82%. On an annualized rate, these funds have returned 4.67% over the last three years and lost 0.21% over the last five. Meanwhile, the Morningstar US Core Bond Index has returned 6.93% over the last 12 months, gained 4.54% per year over the last three years, and lost 0.33% per year over the last five years.

Screening for the Top-Performing 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 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 US Core Bond Index.

We looked at returns from the past one, three, and five years using data 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 a Morningstar Medalist Rating of Bronze, Silver, or Gold. We excluded funds with assets under $100 million and analyst coverage that was not 100%. This left seven investments.

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.

Baird Aggregate Bond Fund

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

This $56.7 billion fund has gained 7.10% over the past year, while the average fund in its category is up 6.82%. The Baird fund, launched in September 2000, has climbed 5.21% over the past three years and lost 0.01% over the past five.

Baird Aggregate Bond’s penchant for incremental progress rather than dramatic leaps makes it a standout option within the intermediate-core bond Morningstar Category.

The strategy’s preference for small over big changes includes transitions within its 10-person management team, such as a recent shift in titles. In early 2025, longtime research director Jay Schwister succeeded Mary Ellen Stanek as the co-chief investment officer alongside Warren Pierson. Stanek, who won Morningstar’s 2022 Outstanding Portfolio Manager award, became emeritus chief investment officer. Schwister has retained his research director duties, while Stanek remains a named manager here.

It would not be surprising if Stanek and fellow Baird founder Charles Groeschell retired within the next three to five years, though they have made no announcement to that effect. If so, however, the team would be well prepared to carry on the Baird legacy, thanks to their methodical approach to preparing team members for new roles. Pierson, for example, spent more than three years as the deputy chief investment officer before becoming the co-chief investment officer alongside Stanek in October 2021.

The Baird legacy also includes a straightforward but effective investment approach. Sticking to US-dollar-denominated bonds without the potential complications of derivatives or leverage, it begins with matching the Bloomberg US Aggregate Bond Index’s overall interest-rate sensitivity, or duration, and then allocating to the bond sectors with the most attractive combination of underlying fundamentals, valuations, and liquidity.

Although credit risk is muted compared with more aggressive category rivals, the strategy tends to favor BBB credits. Since mid-2022, the portfolio’s 21% to 24% allocation to BBB rated bonds has consistently ranked in the peer group’s top quintile.

The strategy isn’t immune to periodic underperformance. Its duration-neutral approach struggled when interest rates surged in 2022, for example. Overall, though, the fund has been a model of consistency. Through year-end 2024, the institutional shares’ trailing one-, three-, five-, 10-, and 15-year returns were all ahead of those of the index and distinct peer median, and they looked even better when adjusted for volatility.

Fidelity Investment Grade Bond Fund

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

Over the past year, the Fidelity fund rose 7.14%, while the average fund in its category rose 6.82%. The fund, launched in October 2018, has climbed 5.11% over the past three years and gained 0.15% over the past five years.

Collaboration is central to the strategy’s process. The team adjusts sector allocations and yield-curve positioning when they identify pockets of value in various sectors. 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. Strict guardrails around duration, a measure of interest-rate risk, help to limit that volatility when there are big moves in interest rates; the team often keeps the portfolio’s duration within one third of a year of its Bloomberg US Aggregate Bond Index’s.

Thanks to nimble sector calls over the trailing decade through April 2025, the mutual fund’s Z shares’ 2.1% annualized return outpaced its index and placed in the top decile of distinct intermediate core bond Morningstar Category peers with a similarly strong volatility-adjusted return, as measured by Sharpe ratio.

Guggenheim Core Bond Fund

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

This $2.7 billion fund has gained 7.70% over the past year, while the average fund in its category is up 6.82%. The Guggenheim fund, launched in January 2013, has climbed 5.85% over the past three years and 0.13% over the past five.

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 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.

John Hancock Investment Grade Bond Fund

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

Over the past year, this fund rose 7.41%, while the average fund in its category rose 6.82%. The fund, launched in March 2015, has climbed 5.18% over the past three years and is unchanged over the past five.

The team’s thoughtful macroeconomic views, paired with careful security selection, are a cornerstone to the strategy’s success. Sector rotations mainly among investment-grade corporate credit, securitized assets, and Treasuries have been the product of the fund’s effective valuation-based approach. Historically, structured fare has accounted for 35%-55% of the portfolio, followed by corporate debt (30%-45%) and Treasuries (10%-20%).

The manager’s emphasis on sector valuations was on full display over 2022 and 2023: As corporate debt remained pricier through 2022, the team trimmed its allocation to 28% as of June 2023 from 34% in June 2022. During the same period, the managers increased exposure to agency mortgage-backed securities and Treasuries to stand at 33% and 23%, respectively. These changes reflected the managers’ efforts to position the portfolio more defensively in anticipation of an economic downturn. Since 2023, the team has maintained its defensive stance, with minor adjustments to sector allocations, only selectively adding credit risk. As of March 2025, high-quality agency MBS occupied the portfolio’s largest allocation at 38%, followed by corporate debt at 29%.

While the team reduced its exposure to riskier debt and avoided high-yield bonds, the portfolio still carries plenty of credit risk with a hefty weighting to BBB rated debt; this stood at 25% of total assets in March 2025, 11 percentage points more than its intermediate core-bond Morningstar Category’s distinct peer median.

The strategy’s tilt toward lower-rated investment-grade securities has resulted in a riskier portfolio than its benchmark and typical category rival. That profile has stung in bouts of downturns but also helped outperform when risk is rewarded, such as in 2023 and 2024. Long-term performance has been strong, resulting mostly from this deliberate credit preference. Over a decade, the strategy’s volatility-adjusted return (as measured by the Sharpe ratio) was better than 60% of its peers.

JPMorgan Core Bond Fund

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

This $53.2 billion fund has climbed 7.51% over the past year, outperforming the average fund in its category, which rose 6.82%. The JPMorgan fund, launched in February 2005, has climbed 5.20% over the past three years and 0.39% over the past five.

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 comanager 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’s but 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. The European-domiciled fund’s restrictions result in a slightly higher quality portfolio, and thus lower performance relative to the US version.

Neuberger Berman Core Bond Fund

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

Over the past year, the Neuberger Berman fund rose 7.09%, while the average fund in its category rose 6.82%. The fund, launched in January 2019, has climbed 5.01% over the past three years and 0.08% over the past five.

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 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 strategy’s myriad risk buckets enable it to remain competitive across a variety of market environments and has 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.

Vanguard Core Bond Fund

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

The $18.2 billion fund has climbed 7.45% over the past year, outperforming the average fund in its category, which rose 6.82%. The Vanguard fund, launched in March 2016, has climbed 5.11% over the past three years and 0.03% over the past five.

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 fourth 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 Admiral share class’ 1.8% annualized gain 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.