Provides high capital preservation, zero equity correlation, and steady income without taking on credit risk or severe interest rate duration risk. Better than holding cash because of the higher yield.
Select a fund with a low expense ratio and high liquidity (large market cap).
HOLD IN IRA: Coupon payments and dividends are taxed as ordinary income.
| Fund | Symbol | Type | Expense Ratio | Market Cap / AUM | Live Price | Index / Benchmark / Notes |
|---|---|---|---|---|---|---|
| Vanguard Short-Term Treasury ETF | VGSH | ETF | 0.03% | $39.3B | $57.46 | Bloomberg 1-3 Year U.S. Treasury Index 1-3 year duration; Recommended |
| iShares 1-3 Year Treasury Bond ETF | SHY | ETF | 0.15% | $26.6B | $81.05 | ICE US Treasury 1-3 Year Bond Index 1-3 year duration |