Best ETFs For Trading: Short-Term Bonds


These 31 funds are the cheapest for short-term stakes in short-term bonds.


Do you have idle cash in your brokerage account? Chances are it’s not earning much. Consider switching to a brief investment in an exchange-traded fund that owns short-term bonds.

The scorecard below shows the cheapest ETFs for a position held for three months. A good deal lets you in and out of fixed-income securities at a cost of $4 or less per $10,000 invested.

3-month Holding Cost*
Liquidity Score
Ticker Exchange-traded fund
Diversified and corporate
CSJ iShares 1-3 Year Credit Bond $2.05 A
BSV Vanguard Short-Term Bond 3.07 A
ISTB iShares Core 1-5 Year USD Bond 3.42 A
SLQD iShares 0-5 Year Invmt Grade Corp Bd 4.26 B
SPSB SPDR Portfolio Short Term Corp Bd 5.07 A
IBDK iShares iBonds Dec 2019 Term Corp 6.40 B
FLOT iShares Floating Rate Bond 6.72 A
PULS PGIM Ultra Short Bond 6.83 B
FLRN SPDR Blmbg Barclays Inv Grd Flt Rt 7.02 A
IBDL iShares iBonds Dec 2020 Term Corp 7.32 B
BSCI PowerShares BulletShrs 2018 Corp Bd 7.32 B
JPST JPMorgan Ultra-Short Income 8.09 A
NEAR iShares Short Maturity Bond 8.24 A
GSY PowerShares Ultra Short Duration 8.35 A
IBDH iShares iBonds Dec 2018 Term Corp 8.38 B
FLTR VanEck Vectors Investment Grd Fl Rt 8.54 B
BSCK PowerShares BulletShrs 2020 Corp Bd 8.55 B
BSCJ PowerShares BulletShrs 2019 Corp Bd 8.55 B
MINT Pimco Enhanced Short Maturity Active 9.87 A
VGSH Vanguard Short-Term Treasury 3.89 A
SCHO Schwab Short-Term US Treasury 4.07 A
BIL SPDR Blmbg Barclays 1-3 Mth T-Bill 4.54 A+
ICSH iShares Ultra Short-Term Bond 4.55 B
SHV iShares Short Treasury Bond 4.70 A+
SHY iShares 1-3 Year Treasury Bond 5.02 A+
GBIL Goldman Sachs TreasuryAccess 0-1 Year 5.31 A
CLTL PowerShares Treasury Collateral 5.85 B
SPTS SPDR Portfolio Short Term Treasury 6.61 B
TFLO iShares Treasury Floating Rate Bond 7.32 B
USFR WisdomTree Bloomberg Floating Rt Trs 7.83 B

*Cost of a $10,000 position held for three months. Reflects bid/ask spread, expense ratio and cost offset from securities lending.

Data sources: Morningstar, Bloomberg, fund distributors

There’s some risk in short-term bonds. If rates rise further, they will get dinged. But it’s just as likely that rates will go down, giving you a modest capital gain. Either way, you pocket the interest, which is going to be just over 2% a year for most of these funds.

Suppose you have $10,000 on the sidelines. In a short-term bond fund it could, over three months, bring in $60 less the cost shown in the table, for a net of $55 or so. Left in your brokerage sweep account, it might earn only $5.

Besides rate risk, some bond funds have credit risk. It’s negligible for the government-bond funds in the second half of the table, but something to think about for the funds that own corporate bonds.

Morningstar is a good source of further detail on bond funds. Two attributes to pay particular attention to: the average maturity of the bonds in the portfolio (less than three years for all of the funds here) and the average credit quality.

For cost comparisons on ten-year holding periods, see Best ETFs for Investors: Short-Term Bonds. For links to rankings of ETFs on short-term holding periods in other categories (medium-term bonds, foreign stocks, etc.), go to Best ETFs for Trading.

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