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Best total bond market index funds for 2024

Tony Dong

Verified By
Farran Powell
Farran Powell

Farran Powell

Verified by an expert

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

Verified By
Stephanie Steinberg
Stephanie Steinberg

Stephanie Steinberg

Verified by an expert

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

BLUEPRINT

Updated 3:11 p.m. UTC July 2, 2024

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Total bond market index funds can provide income and ballast during market downturns by tracking the performance of a benchmark bond index.

“(They) tend to have low expense ratios, no front or back-end load costs, no 12b-1 marketing fees, no transaction charges or commissions, low tracking errors relative to their benchmark, and consistent inflows,” says Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.

We applied a strict set of criteria to identify the best total bond market index funds for 2024, assessing each fund’s benchmark index, level of diversification, net expense ratio and more.

Best total bond market index funds for 2024

Fidelity U.S. Bond Index Fund (FXNAX)

Expense ratio

0.025%

10-year return as of June 30

1.33%

What you should know

Fidelity’s flagship bond fund is FXNAX. The fund dates back to 1990, and has accrued more than $56.7 billion in total assets since its inception. The fund follows the Bloomberg U.S. Aggregate Bond Index as its benchmark and aims to track its performance via a sampling technique.

Instead of replicating the index in full by purchasing all the underlying securities, FXNAX selects a smaller portion of securities that aim to replicate the index’s returns. The fund has an average duration of 6.21 years, representing an intermediate level of interest rate sensitivity and is typical of total bond market index funds.

Pros and cons

Pros
  • No minimum required investment, transaction fees or sales loads.
  • A meager expense ratio of 0.025%.
  • A long track record of operations since 1990.
Cons
  • No exposure to Treasury-Inflation Protected Securities, known as TIPS.
  • No exposure to high-yield bonds.
  • Excludes tax-exempt municipal bonds.

More details

Benchmark index: Bloomberg U.S. Aggregate Bond Index.
Minimum investment: $0.

Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)

Expense ratio

0.05%

10-year return as of June 30

1.33%

What you should know

As the counterpart to Vanguard’s popular total stock market index fund, VBTLX trails FXNAX slightly in terms of track record with the inception year of 2001, but eclipses it in assets with $318.5 billion for the Admiral Shares class.

Technically, VBTLX has an expense ratio double the amount of FXNAX, but that can be misleading as it still clocks in at a low 0.05%. For a $10,000 portfolio, that works out to around $5 in annual fees. Since 2010, the fund has tracked a modified version of the Bloomberg U.S. Aggregate Bond Index, called the Bloomberg U.S. Aggregate Float Adjusted Index. VBTLX’s portfolio features more than 10,000 bonds, averaging a duration of 6.6 years. They span both government and investment-grade corporate issues.

Pros and cons

Pros
  • A low expense ratio of 0.05%.
  • A long track record of operations since 2001.
  • High assets under management.
Cons
  • Requires a $3,000 minimum investment.
  • No exposure to high-yield bonds.
  • Excludes tax-exempt municipal bonds.

More details

Benchmark index: Bloomberg U.S. Aggregate Float Adjusted Index.
Minimum investment: $3,000.

Schwab U.S. Aggregate Bond Index Fund (SWAGX)

Expense ratio

0.04%

10-year return as of June 30

N/A

What you should know

SWAGX’s value proposition is simple: It offers straightforward, transparent and affordable exposure to more than 8,000 investment-grade government and corporate bonds from the U.S. market. It features the usual intermediate duration of 6.2 years by tracking the popular Bloomberg U.S. Aggregate Bond Index. Like many Charles Schwab funds, SWAGX does not require a minimum investment or charge a 12b-1 fee.

Pros and cons

Pros
  • A low expense ratio of 0.04%.
  • No minimum investment.
  • No 12b-1 fees.
Cons
  • Shorter track record since launching in 2017.
  • No exposure to high-yield bonds.
  • Low exposure to municipal bonds.

More details

Benchmark index: Bloomberg U.S. Aggregate Bond Index.
Minimum investment: $0.

Northern Bond Index Fund (NOBOX)

Expense ratio

0.07%

10-year return as of June 30

1.24%

What you should know

Another option for exposure to the benchmark Bloomberg U.S. Aggregate Bond Index is NOBOX. The fund sports the usual assortment of U.S. Treasurys, agency bonds, mortgage-backed securities and investment-grade corporate bonds from industrial, financial and utility sector companies.

NOBOX has more than 2,400 holdings — a lower number than the others on this list — and features an average duration of 6.6 years.

Pros and cons

Pros
  • A long track record of performance since 2007.
  • A low expense ratio of 0.07%.
  • Offers the usual broad diversification for the U.S. bond market.
Cons
  • Requires a minimum $2,500 investment.
  • Limited exposure to municipal bonds.
  • More than 2% of bonds are below BBB grade.

More details

Benchmark Index: Bloomberg U.S. Aggregate Bond Index.
Minimum investment: $2,500.

iShares U.S. Aggregate Bond Index Fund (BMOAX)

Expense ratio

0.35%

10-year return as of June 30

1.00%

What you should know

A pick from BlackRock iShares to consider is BMOAX. As usual, this fund tracks a broad portfolio of U.S. Treasurys, agency bonds, mortgage-backed securities and investment-grade corporate bonds averaging an intermediate duration of 6.42 years. ​​These traits make the fund a possible core bond allocation for investors, who can then layer on additional types of bond funds as they see fit.

Pros and cons

Pros
  • Decent track record with the inception year of 2011.
  • Offers the usual broad diversification for the U.S. bond market.
  • 72.8% allocation to AAA-rated bonds.
Cons
  • Higher expense ratio of 0.35%.
  • Requires a minimum $1,000 investment.
  • Does not offer exposure to high-yield bonds or TIPS.

More details

Benchmark index: Bloomberg U.S. Aggregate Bond Index.
Minimum investment: $1,000.

T. Rowe Price QM U.S. Bond Index Fund (PBDIX)

Expense ratio

0.25%

10-year return as of June 30

1.35%

What you should know

PBDIX tracks the Bloomberg U.S. Aggregate Bond Index, albeit with a slight twist. According to the fund’s homepage, the portfolio manager not only selects a set of U.S. bonds that represent key benchmark traits but also attempts to generate a “modest amount of outperformance over the index.”

PBDIX has returned close to its benchmark index. For all intents and purposes, this fund is another average total bond market index fund tracking the Bloomberg U.S. Aggregate Bond Index.

Pros and cons

Pros
  • Long track record since launching in November 2000.
  • Offers the usual broad diversification for the U.S. bond market.
  • Offered with no transaction fees at TD Ameritrade, Schwab, Fidelity and E-Trade.
Cons
  • Higher expense ratio of 0.25%.
  • Lower assets of $1.4 billion.
  • Requires a $2,500 minimum investment with subsequent investments of at least $100.

More details

Benchmark index: Bloomberg U.S. Aggregate Bond Index.
Minimum investment: $2,500.

Compare the best bond market index funds

FUND (TICKER)EXPENSE RATIOINDEXMINIMUM INVESTMENT
Fidelity U.S. Bond Index Fund (FXNAX)
0.025%
Bloomberg U.S. Aggregate Bond Index
$0
Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX)
0.05%
Bloomberg U.S. Aggregate Float Adjusted Index
$3,000
Schwab U.S. Aggregate Bond Index Fund (SWAGX)
0.04%
Bloomberg U.S. Aggregate Bond Index
$0
Northern Bond Index Fund (NOBOX)
0.07%
Bloomberg U.S. Aggregate Bond Index
$2,500
iShares U.S. Aggregate Bond Index Fund (BMOAX)
0.35%
Bloomberg U.S. Aggregate Bond Index
$1,000
T. Rowe Price QM U.S. Bond Index Fund (PBDIX)
0.25%
Bloomberg U.S. Aggregate Bond Index
$2,500

Methodology

Our curated rankings of the top bond index funds were created by screening funds for several must-have metrics:

Total assets: Each bond fund on this list must have accrued assets of at least $1 billion. High assets indicate sufficient investor interest and trust in a fund, which measures fund stability and longevity. Funds with low assets run the risk of shutting down.

Expense ratio: Each bond fund screened has a net expense ratio under 0.4%. Keeping expense ratios low helps boost long-term performance and minimize how much a fund lags its benchmark.

Benchmark: All the bond funds ranked track the Bloomberg U.S. Aggregate Bond Index or a variant. This index provides the most recognized exposure to a wide swathe of the U.S. bond market in terms of issuer, credit quality and maturity.

Minimum investment: All the funds evaluated had a minimum required investment of $3,000 or less. The lower the minimum investment requirement, the more accessible a bond fund is for retail
investors.

An experienced fund analyst selected the funds above, but they may not be right for your portfolio. Before purchasing any of these funds, do plenty of research to ensure they align with your financial goals and risk tolerance.

Why other funds didn’t make the cut

Given the funds we evaluated tracked the same benchmark index — the Bloomberg U.S. Aggregate Bond Index — the funds on this list were chosen primarily based on fees, with lower fees being better.

All else being equal, two funds tracking an identical index will differ in returns based on their expense ratios. As with returns, the deleterious effects of high expense ratios can compound over time and cause a bond fund to lag its index.

Total bond market funds with high expense ratios, 12b-1 fees or sales loads were excluded from this ranking. Given the lower return of bonds, it is all the more important to minimize fees and keep more money compounding rather than being paid out to a manager.

We also excluded institutional-grade funds for professional investors like family offices and pension funds. These funds often require a sizable minimum investment, which makes them inaccessible to most retail investors.

We omitted funds that did not represent the total bond market. For instance, funds that tracked a government or corporate-only bond index or a short-term or long-term-only bond index were excluded. While these funds can have uses for investors with specific objectives and risk tolerances, they don’t offer the broadest level of diversification. In contrast, a total bond fund encompasses most bond issuers, maturities and credit qualities.

Finally, we excluded total bond funds that hold international bonds. While investors can use these funds for diversification, this list focuses on total bond funds for the U.S. market.

Final verdict

For investors looking to incorporate a fixed-income allocation in their portfolios, total bond market index funds offer a one-stop shop for a good core foundation. From there, investors can add bond funds that have different issuers, credit qualities and durations to mix and match based on their investment objectives and risk tolerance. 

Our pick for the best total bond index fund is the Fidelity U.S. Bond Index Fund (FXNAX), owing to its competitive fees and investor-accessible features. With a 0.025% expense ratio, no minimum investment requirements, transaction fees, sales loads or 12b-1 fees, this fund is hard to beat in terms of sheer value and versatility.

Frequently asked questions (FAQs)

Total bond market index funds do not “mature” in the same way that individual bonds do. While individual bonds make semiannual interest payments until maturity when the principal investment is returned to the bondholder, total bond market index funds work differently. 

These funds hold a diversified portfolio of many bonds, with varying credit qualities and staggered maturity dates. As individual bonds in the portfolio mature, the fund manager will sell them and buy new ones to maintain the same, constant target maturity and duration as the underlying index. 

Sources of profit from a bond index fund can come in two forms: interest income and capital appreciation. The portfolio of bonds in a bond index fund all pay interest, which is usually accrued and distributed to investors every month. 

Once received, investors can withdraw this income or reinvest it. The price of the underlying bonds can also increase due to factors that are bullish for bond markets, such as improvements in credit conditions or falling interest rates. 

Despite their popularity, total bond index funds have some disadvantages that may make them unsuitable for some investors. Bond index funds do not mature like individual bond issues, which can result in greater interest rate risk. 

Total bond index funds also hold a variety of different credit qualities and maturities. This can be too broad for investors looking for focused exposure to specific types of bonds like long-term Treasurys or short-term corporate bonds.

Also, total bond index funds can exclude niche bonds like Treasury-Inflation Protected Securities, tax-exempt municipal bonds and high-yield, noninvestment grade junk bonds.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Tony Dong

BLUEPRINT

Tony Dong is a freelance financial writer with bylines in U.S. News and World Report, the NYSE, the Nasdaq, The Motley Fool and Benzinga. He lives in Vancouver, Canada and is an avid watch collector.

Farran Powell

BLUEPRINT

Farran Powell is the lead editor of investing at USA TODAY Blueprint. She was previously the assistant managing editor of investing at U.S. News and World Report. Her work has appeared in numerous publications including TheStreet, Mansion Global, CNN, CNN Money, DNAInfo, Yahoo! Finance, MSN Money and the New York Daily News. She holds a BSc from the London School of Economics and an MA from the University of Texas at Austin. You can follow her on Twitter at @farranpowell.

Stephanie Steinberg

BLUEPRINT

Stephanie Steinberg has been a journalist for over a decade. She has served as a health and money editor at U.S. News and World Report, covering personal finance, financial advisors, credit cards, retirement, investing, health and wellness and more. She founded The Detroit Writing Room and New York Writing Room to offer writing coaching and workshops for entrepreneurs, professionals and writers of all experience levels. Her work has been published in The New York Times, USA TODAY, Boston Globe, CNN.com, Huffington Post, and Detroit publications.

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