Core Insights - Bonds are essential for portfolios, providing reliable income and stability during stock market downturns, but they carry risks, particularly in volatile interest rate environments [1] - The iShares Core US Aggregate Bond ETF (EG) experienced a 13% loss in 2022, underperforming many high dividend yield ETFs, while shorter-term bond ETFs fared better, with losses under 5% [2] Short-Term Bond ETFs - Not all short-term bond ETFs offer the same risk-return profile; some provide low returns due to their low-risk nature, while others maximize yield while managing interest rate risk [3] - The PIMCO Enhanced Short Maturity Active ETF (MT) has an effective duration of less than six months, minimizing interest rate risk while delivering solid payouts [4][5] - The Vanguard Short-Term Treasury ETF (VGSH) is the only passive strategy among the highlighted ETFs, charging a low fee of three basis points and focusing solely on US Treasuries, thus minimizing both interest rate and credit risk [6][7] - The JP Morgan Income ETF (JPIE) charges 39 basis points and has a flexible mandate allowing it to invest in a wide range of bonds, including below investment grade, while managing interest rate and credit risk based on macroeconomic views [9][10] Performance and Strategy - The Vanguard ETF has a duration of under two years and has outperformed its peers in terms of yield and performance over long-term periods [8] - The JP Morgan ETF aims for consistent income with a volatility target of 4 to 6% per year, successfully delivering predictable payouts since its inception [11]

Group 1 - Vanguard offers its ETF, BSV Vanguard Short-Term Bond, targeting investors seeking exposure in the short end of the yield curve [1] - The index followed by BSV is the Bloomberg U.S. 1–5 Year Government/Credit Float Adjusted [1]

Core Insights - Financial advisors recommend staying invested rather than holding cash, with short-term bond funds being a viable option for this purpose [1] - Short-duration bonds help mitigate rate risk, especially amid uncertainty regarding U.S. Federal Reserve interest rate decisions [2] - Persistent inflation may lead to unexpected Fed policy shifts, making short-term bonds a protective measure due to their lower sensitivity to rate changes [3] Investment Strategy - Maximizing yield is crucial for fixed income investors, and short-term bond funds can protect assets from market volatility until cash needs arise [4] - Yields from short-term bond funds typically surpass those of money market savings accounts, which may not keep pace with inflation [5] Fund Options - Fidelity offers three short-term bond funds: 1. Fidelity Limited Term Bond ETF (FLTB) provides exposure to a variety of bond sources, including investment-grade and high-yield securities [8] 2. Fidelity Low Duration Bond ETF (FLDB) focuses on investment-grade debt securities with a duration of one year or less [8] 3. Fidelity Low Duration Bond Factor ETF (FLDR) tracks an index that balances interest rate and credit risk to improve returns and risk measures [8]