As the Federal Reserve continues its tightening cycle, some fixed income investors are moving to short-term bond funds.

Corporate bonds should be part of that conversation and the SPDR Portfolio Short Term Corp Bd ETF (NYSEArca: SPSB) is one exchange traded fund that can help investors stick with this income-generating asset class while reducing interest rate risk.

SPSB seeks investment results that correlate with the Bloomberg Barclays U.S. 1-3 Year Corporate Bond Index, which is designed to measure the performance of the short term U.S. corporate bond market.

“While one could choose plain cash, the real rate of cash is negative; with inflation chipping away at value, a cash holding actually declines in value over time,” according to Investopedia.

The fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index or in securities that have similar economic characteristics to those of the securities that comprise the index. Since the index is designed to measure the performance of the short term U.S. corporate bond market, it gives investors a solid mix of interest rate risk hedging while limiting duration. SPSB has provided investors with a 1.28% return the last three years.

Cost-Effective Exposure

SPSB is part of State Street’s suite of SPDR portfolio ETFs, a group of low-cost funds designed to be core portfolio holdings for cost-conscious investors. Last year, the issuer lowered the fees on a broad swath of ETFs, including SPSB.

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