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ETF Specialist

This ETF Targets an Ultrasafe Segment of the Market

Risk is not currently paying off--might as well be safe with Vanguard Short-Term Treasury ETF.

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Investors aiming to protect their portfolio against inflation, the potential for loss of principal, and to reduce volatility would be wise to consider Vanguard Short-Term Treasury ETF (VGSH). The strategy tracks a short-term Treasury bond index, resulting in a portfolio carrying very little interest-rate and credit risk. Risk and return are highly correlated in the fixed-income market, so this fund will not generate mouthwatering results, but it will deliver consistent returns and provide strong downside protection. Since its inception in November 2009, its standard deviation was over 2 percentage points less than the Bloomberg Barclays US Aggregate Bond Market index and nearly 12 percentage points less than the S&P 500.  

Vanguard Short-Term Treasury is one of the cheapest short-term Treasury funds available, which makes it one of the best. It earns a Morningstar Analyst Rating of Silver.

Neal Kosciulek does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.