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 Bloomberg US 1-5 year Corporate
Bond Index.
|
| Vanguard Short-Term Corporate Bond ETF (VCSH).
E/R: 0.04%. This ETF tracks the Bloomberg 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: 0.16%.
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: 0.20%.
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).
|
| Avantis Short-Term Fixed Income Fund (AVSFX). E/R: 0.15%.
This fund buys short-term bonds.
|
| Avantis Short-Term Fixed Income ETF (AVSF). E/R: 0.15%.
This ETF buys short-term bonds.
|
| DFA Short-Term Extended Quality Portfolio (DFEQX). E/R: 0.18%.
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: 0.16%.
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.
|
| Schwab 1-5 Year Corporate Bond ETF (SCHJ).
E/R: 0.03%. This ETF tracks the Bloomberg U.S. 1-5 Year
Corporate Bond Index.
|
| SPDR Portfolio Short Term Corporate Bond ETF (SPSB).
E/R: 0.04%. This ETF tracks the Bloomberg U.S. 1-3 Year
Corporate Bond Index.
|
| iShares 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.
|
| iShares 1-5 Year Investment Grade
Corporate Bond ETF (IGSB).
E/R: 0.04%. This ETF tracks the ICE BofA 1-5 Year US
Corporate Index.
|
| BNY Mellon Short Duration Corporate Bond ETF (BKSB).
E/R: 0.06%. This ETF attempts to track the Bloomberg US
Corporate 1-5 Years Total Return Index of Short-term US Corporate
Bonds.
|
| Fidelity Short-Term Bond Index Fund (FNSOX). E/R: 0.03%. This
fund tracks the Bloomberg 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: 0.07%. This
fund tracks the Bloomberg 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: 0.04%. This ETF tracks the Bloomberg 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).
|
| iShares 1-3 Year International Treasury
Bond ETF (ISHG).
E/R: 0.35%. This ETF tracks the FTSE World Government Bond
Index-Dev Markets 1-3 Years Capped Select Index. Basically, it
invests in short-term treasury bonds of developed countries outside
the US.
|
| SPDR Barclays Capital Short Term International Treasury Bond ETF (BWZ).
E/R: 0.35%. This ETF tracks the Bloomberg 1-3 Year Global
Treasury ex-US Capped index. Basically, it invests in
short-term treasury bonds of developed countries outside the US.
|
| iShares 5-10 Year Investment Grade
Corporate Bond ETF (IGIB).
E/R: 0.04%. This ETF tracks the ICE BofA 5-10 Year US
Corporate Index.
|
| TIAA-CREF Short-Term Bond Fund Advisor Shares (TCTHX). E/R: 0.36%.
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:
0.48%. 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.
