Bond investors have had a tough year overall. When this was written, the Morningstar U.S. Core Bond Index, a widely-used proxy for the bond market, had fallen by more than 10% this year. As a result of continued high inflation and rising interest rates, bond investors have been hammered by what many call a historic bear market.

Should bond investors move their money to shorter-term bonds less vulnerable to interest rate swings? Christine Benz, director of personal finance and retirement planning at Morningstar, argues that an investor's time horizon and the timing of any withdrawals are more critical than the current status of the bond market. She advises that despite the recent bond market volatility, investing in intermediate-term core bond funds is still better if you need the money in six to 10 years. You should look at short-term bond funds to meet your savings target within three to five years.

Mutual Funds and Exchange-Traded Funds (ETFs) Offering Short-Term Bonds These ETFs are classified as either "Short-Term Bonds" or "Intermediate-Term Bonds" in Morningstar's database and have earned the coveted "Gold" rating from the site's analysts for at least one of its share classes.

Baird Short-Term Bond

People who put money into Vanguard's Short-Term Corporate Bond ETF (VSTBX) or Vanguard's Vanguard Corporate Short-Term Bond ETF (VCSH)

Vanguard Short-Term Treasury Index ETF (VSBSX VGSH) After the jump, I'll give you a quick rundown of your investment choices. All information was compiled on June 9, 2022.

• Baird's Issue of Term Loan Obligations
• Morningstar's Opinion on Short-Term Bonds
• The ratio of Income to Expenditures: 0.30
• Duration of Time (1.92 Years)

This short-term bond fund is expertly managed, and its holdings include government bonds, high-quality corporate bonds, and securitized credit. By selecting high-quality securities and rebalancing the fund's holdings across different sectors with a preference for non-government bonds, the team adds value while maintaining the fund's duration (a measure of interest rate sensitivity) at a constant level relative to the Bloomberg U.S. Government/Credit 1-3 Year Index.

PGIM Short-Term Corporate Bond

• Morningstar Category: Short-Term Bon
• Expense Ratio: 0.38
• Effective Duration: 2.74 years

This short-term bond fund seeks annualized returns (before fees and expenses) that are greater than the performance of the Bloomberg 1-5 Year Credit Index by 0.60% through active management. The management staff, which is knowledgeable and well-rounded, aims for outperformance through security and sector rotation rather than through excess duration management. The group prefers a or BBB-rated corporate bonds over the higher-grade paper. Although the fund has a more significant credit risk than similar short-term bond funds, it has outperformed its peers over the long term, as Morningstar strategist Eric Jacobson noted.

A Vanguard Short-Term Corporate Bond

• Morningstar's Opinion on Short-Term Bond
• Unlike exchange-traded funds (ETFs), mutual funds have higher expenses (0.05% vs. 0.04%). (ETF
• Age at Full Effectiveness: 2.77

This mutual fund or ETF tracks the performance of an index composed of investment-grade corporate bonds issued by U.S. corporations with maturities between one and five years, named the Bloomberg U.S. 1-5 Year Corporate Bond Index. This fund, like the others featured, is exposed to credit risk. To counter its relatively high expense ratio, this fund has historically outperformed its peers over the long term. It provides a transparent route into the high-quality short-term bond market.

Vanguard Short-Term Treasury

• Type: Morningstar Short Government
• Costs associated with investing in a mutual fund are 0.07%, whereas those for an individual investor are 0.04%. (ETF)
• Timeframe (1.91 years)

In contrast to the other products shown, Vanguard Short-Term Treasury only purchases short-term U.S. Treasuries. This mutual fund and ETF index fund attempt to replicate the market performance of an underlying index composed entirely of United States Treasuries with maturities between one and three years. There is minimal credit risk for the fund because it invests almost exclusively in solid businesses. The fund's emphasis on the short end of the yield curve reduces even the risk associated with interest rate risk, which substantially influences performance. Living expenses are low, which is another selling point for this area.

Funds and Exchange

When investing in short-term bond funds, expenses are crucial, but they are significant when analyzing all funds. Read Morningstar's Guide to Fund Investing for more advice on where to locate reliable funds. In addition to the funds highlighted here, we also have a list of the best taxable bond funds and a list of the best core stock funds, as well as lists of the best small company funds, growth stock funds, value stock funds, foreign stock funds, and more.