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Possible Fed rate increases in 2026 could make short-term bonds a good choice.
A lot of investors associate Vanguard almost exclusively with low-cost passive indexing on the equity side.
Vanguard Ultra-Short Bond ETF is positioned as a logical replacement for cash-like holdings amid a non-inverted yield curve. VUSB offers a yield of roughly 4.35%, achieved by modestly increasing credit and duration risk compared to traditional money market funds. Recent market dynamics—yield curve normalization and rising rates—support redeploying cash into both general markets and longer fixed-income ETFs.
The Bogleheads 3-fund portfolio calls for an allocation to aggregate bond funds. They're broadly diversified, low cost, and do a decent job of reducing overall portfolio volatility.
If your priority is federal tax efficiency, the iShares Short-Term National Muni Bond ETF (NYSEARCA: SUB) is worth considering.
Vanguard Ultra-Short Bond ETF is downgraded from hold to sell due to declining carry following consecutive rate cuts. VUSB's yield advantage over 3-month Treasury bill ETFs like SGOV has narrowed to 0.52%, insufficient to compensate for higher duration and spread risks. The ETF's portfolio, with a 1-year average duration and 91% investment-grade bonds, remains exposed to further income declines as rates fall.
The same macro factors affecting the equities market, such as tariffs, geopolitical factors, and a changing interest rate policy are also affecting the fixed income markets. With that, there's never been a better time to access active fixed income strategies that help advisors and investors navigate the murky macro environment.
Advisors may sometimes feel like they're venturing out to solve the world's personal financial problems alone. This applies to entrepreneurs managing their own firms and intrapreneurs who are part of an existing firm.
Full call transcripts — prepared remarks + analyst Q&A — with speaker-by-speaker formatting and one-click switching across every quarter on file.
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Transcripts source: company-published earnings calls. Speaker attribution and formatting are processed in-app.