Originally Posted by jkern
This index fund only has a Morningstar rating of 3 stars. Is this anything to be concerned about or is there a better choice?
It's a vanguard bond fund. Which means it's likely best in category (or very close to the best) for what it claims to do: index the entire bond market at lowest cost.
You need to decide if that is what you want.
As others have mentioned, you may want to look at duration and sec yield. Some other reasons to like or not like the bond fund is that it only has 60% in government bonds -- some people want more government (i.e. 100% treasuries for their bond portion), some people want more corporate. The total bond fund also has something like 20% in mortgage backed securities, again, you need to decide if you want to have that in your portfolio. If what I'm writing makes no sense to you, then it may help to read a book on bonds.
FWIW I have a chunk in vanguard's total bond fund. Not because I necessarily like everything in it, or feel that it's optimal but rather I feel it's "good enough" and comes with a super low expense ratio. Also sometimes you don't have much choice in funds especially in retirement accounts.
In addition to total bond, I also have bond money in short-term corporate and CDs. I'd also invest in TIPS if real yields ever rise enough above 0.