ETF Bond Duration: Short-Term
ETFs, or exchange traded funds, are investment vehicles that trade on an exchange like a stock. ETFs hold a basket of assets, which can be anything from stocks to bonds to commodities. ETFs are popular because they offer investors exposure to a wide variety of asset classes in a single fund. Short-Term bond ETFs are ETFs that invest in bonds with short durations, typically three years or less. Short-Term bond ETFs offer investors the potential for higher returns than money market funds, with less volatility than longer-term bond ETFs. However, Short-Term bond ETFs are more sensitive to changes in interest rates than other types of bond ETFs. For example, if interest rates rise, the value of Short-Term bond ETFs will decline. Investors should consider their investment objectives and risk tolerance before investing in any ETF.