Among short-term Treasury bond ETF options, investors can look to the iShares 1-3 Year Treasury Bond ETF (NYSEArca: shy), which has a 1.84 year duration and a 0.64% 30-day SEC yield, Schwab Short-Term U.S. Treasury ETF (NYSEArca: scho), which has a 1.9 year duration and a 0.7% 30-day SEC yield, and Vanguard Short-Term Government Bond ETF (NYSEArca: VGSH), which has a 1.9 year duration and a 0.7% 30-day SEC yield.
While these conservative short-term bond plays may seem boring and offer lower yield opportunities, the funds’ low durations help investors weather rising rates and hedge against any volatile turns in the broader market, as opposed to long-duration bond ETFs like TLT, which can cause a significant loss in principal.
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Additionally, there are a number of other short-term, investment-grade bond ETF options available available. For municipal debt exposure, the SPDR Nuveen Barclays Short Term Municipal Bond ETF (NYSEArca: shm) has a 2.81 year duration and a 0.68% 30-day SEC yield. The VanEck Vectors-Short Municipal ETF (NYSEArca: smb) has a 2.76 year duration and a 0.87% 30-day SEC yield. The iShares Short Term National AMT-Free Muni Bond ETF (NYSEArca: sub) has a 1.92 year duration and a 0.54% 30-day SEC yield.
For a little higher yield generation, investors can turn to short-term, investment-grade corporate debt options. The iShares 1-3 Year Credit Bond ETF (NYSEArca: csj) has a 1.97 year duration and a 1.32% 30-day SEC yield, Vanguard Short-Term Corporate Bond Index (NYSEArca: vcsh) has a 2.8 year duration and a 1.87% 30-day SEC yield, and SPDR Barclays Short Term Corporate Bond ETF (NYSEArca: scpb) has a 1.87 year duration and a 1.57% 30-day SEC yield.
By moving down the yield curve with shorter duration bond funds, fixed-income investors can reduce any negative response to higher interest rates.
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