During the rising interest rate environment holding long term bonds may not be a good idea. Although money market yields are somewhat respectable today with rates around 3%, extending the duration a little bit should be able to get the investor some extra return.
The short-term bonds with duration around 2 or 3 may be a stretch for some investors. The duration of 1 or less should be ideal for today’s environment. Following are a few ultrashor/low duration type of funds with no-load, low expense ratio and investable minimumns (less than $5,000).
Schwab YieldPlus Fund (SWYPX)
- Expense ratio 0.59%
- Average Maturity 0.4 years
- 30-day SEC yield 3.87%
- Total net assets about $740 millions
- $2,500 regular account minimum initial purchase
Harbor Short Duration (HASDX)
- Expense ratio 0.39%
- 30-day SEC yield 3.47%
- Total net assets about $54 millions
- $1,000 regular account initial investment
Fidelity Ultra Short Bond Fund (FUSFX)
- Expense ratio 0.45%
- 30-day SEC yield 3.51%
- Total net assets $903 millions
- Average maturity 1.6 years
- Duration 0.3 years
- $2,500 regular account initial investiment
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