Short Term Taxable Bonds are bonds of short duration.
There are several very similar investment options available. Which is
best?
The funds are listed in rough order of our overall preference.
It is generally most prudent to use taxable bonds in retirement accounts. So we
only list preferences for retirement accounts. For taxable accounts
consider Short-Term Tax-Exempt Bonds.
For a listing of our preferences in other asset classes, see
here.
Retirement Accounts (i.e., tax-deferred or tax-exempt accounts)
 | Vanguard Short-Term Corporate Bond Index Fund Admiral Shares (VSCSX).
E/R: 0.07%. This fund tracks the Barclays Capital US 1-5 year Corporate
Bond Index.
|
| Vanguard Short-Term Investment-Grade Fund Admiral Shares (VFSUX).
E/R: 0.10%. This fund principally invests in investment grade corporate
bonds of short duration.
|
| DFA Short-Duration Fixed Income ETF
(DFSD). E/R: 0.18%.
This fund's "variable maturity" and "variable credit" strategies
should somewhat increase risk-adjusted returns.
|
| DFA Five-Year Global Fixed Income Portfolio (DFGBX). E/R: 0.27%.
This fund's "variable maturity" strategy should somewhat increase
risk-adjusted returns. While it contains some foreign bonds, the
currency risk is always 100% hedged. We have only a slight preference
for DFGBX over DFGFX. DFGFX has a lower expense ratio, but DFGBX has
more room for the "variable maturity" strategy to operate over (which should
allow it to be more effective).
|
| DFA Short-Term Extended Quality Portfolio (DFEQX). E/R: 0.22%.
This fund's "variable maturity" and "variable credit" strategies
should somewhat increase risk-adjusted returns. While it contains some foreign bonds, the
currency risk is always 100% hedged. This fund extends into the lower
part of the "investment-grade" universe regarding credit ratings of its
issuers. We have only a slight preference for DFEQX over DFGFX.
|
| DFA Two-Year Global Fixed Income Portfolio (DFGFX). E/R: 0.17%.
This fund's "variable maturity" strategy should somewhat increase
risk-adjusted returns. While it contains some foreign bonds, the
currency risk is always 100% hedged. The five year DFA fund gives the
"variable maturity" strategy more flexibility (more time to shift over),
which should enhance its risk/return characteristics. The two year DFA
fund has a lower E/R and has somewhat less volatility due to its shorter
duration. We have a slight preference for the five-year fund, but both
should be very good choices.
|
| Vanguard Short-Term Investment-Grade Fund (VFSTX).
E/R: 0.20%. This fund principally invests in investment grade corporate
bonds of short duration.
|
| Vanguard Short-Term Corporate Bond ETF (VCSH).
E/R: 0.05%. This ETF tracks the Barclays Capital US 1-5 year Corporate
Bond Index. For
more information on ETFs, see here.
|
| Schwab 1-5 Year Corporate Bond ETF (SCHJ).
E/R: 0.05%. This ETF tracks the Bloomberg Barclays U.S. 1-5 Year Corporate
Bond Index. For
more information on ETFs, see here.
|
| SPDR Portfolio Short Term Corporate Bond ETF (SPSB).
E/R: 0.07%. This ETF tracks the Bloomberg Barclays U.S. 1-3 Year Corporate
Bond Index. For
more information on ETFs, see here.
|
| iShares Barclays 0-5 Year Investment Grade Corporate Bond Fund (SLQD).
E/R: 0.06%. This ETF tracks the Markit iBoxx USD Liquid Investment Grade
0-5 Index. For
more information on ETFs, see here.
|
| iShares Short-Term Corporate Bond ETF (CSJ).
E/R: 0.06%. This ETF tracks the ICE BofAML 1-5 Year US Corporate Index. For
more information on ETFs, see here.
|
| BNY Mellon Short Duration Corporate Bond ETF (BKSB). E/R: 0.06%. This ETF attempts to track the
Bloomberg Barclays US Corporate 1-5 Years Total Return Index of Short-term
US Corporate Bonds. For more information on ETFs, see here.
|
| Fidelity Short-Term Bond Index Fund (FNSOX). E/R: 0.03%. This
fund tracks the Bloomberg Barclays U.S. 1-5 Year Government/Credit Bond
Index. This fund suffers due to its use of treasury bonds (which have
lower expected risk-adjusted returns than similar duration investment-grade
corporate bonds).
|
| Vanguard Short-Term Bond Index Fund Admiral Shares (VBIRX). E/R: 0.09%. This
fund tracks the Barclays US 1-5 year Govt/Credit Index. This fund
suffers due to its use of treasury bonds (which have lower expected
risk-adjusted returns than similar duration investment-grade corporate
bonds).
|
| Vanguard Short-Term Bond Index Fund ETF (BSV). E/R: 0.09%. This ETF tracks the Barclays US 1-5 year Govt/Credit Index. This fund is a
different share class of the Vanguard Short-Term Bond Index Fund (VBIRX). This fund suffers due
to its use of treasury bonds (which have lower expected risk-adjusted returns
than similar duration investment-grade corporate bonds). For more
information on ETFs, see here.
|
| iShares S&P/Citigroup 1-3 Year International Treasury Bond Fund (ISHG).
E/R: 0.35%. This ETF tracks the S&P/Citigroup International Treasury
Bond Index Ex-US 1-3 Year index. Basically, it invests in short-term treasury
bonds of developed countries outside the US. For
more information on ETFs, see here.
|
| SPDR Barclays Capital Short Term International Treasury Bond ETF (BWZ).
E/R: 0.35%. This ETF tracks the Barclays Capital 1-3 Year Global
Treasury ex-US Capped index. Basically, it invests in short-term treasury
bonds of developed countries outside the US. For
more information on ETFs, see here.
|
| iShares Intermediate-Term Corporate Bond ETF (CIU).
E/R: 0.06%. This ETF tracks the ICE BofAML 5-10 Year US Corporate Index. For
more information on ETFs, see here.
|
| TIAA-CREF Short-Term Bond Fund Advisor Shares (TCTHX). E/R: 0.29%.
This fund suffers due to its use of treasury bonds (which have lower expected
risk-adjusted returns than similar duration investment-grade corporate bonds).
|
| PIMCO Low Duration Fund Institutional Shares (PTLDX). E/R:
0.46%. We see no reason to consider this fund given the availability of
the above lower cost alternatives. |
We believe the information provided here to be useful and accurate at the time
it is written.
Information contained herein has been obtained from sources believed to be
reliable, but is not guaranteed.
No investor should invest solely on the basis of information listed here.
Before investing, it is important to consult each prospective investment's
prospectus and consider both its risk/return characteristics and its effect on
your overall portfolio.
This information is not intended to be a
substitute for specific individualized tax, legal, or investment planning
advice. Where specific advice is necessary or appropriate, Altruist
recommends consultation with a qualified tax adviser, CPA, financial planner, or
investment adviser. If you would like to discuss the rationale or support
for any particular idea expressed on this web page, feel free to
contact us.
