In a market disaster where can you park your money to beat inflation?


You know, U.S. Treasury bond funds are often considered a safe bet for many investors.

The reason is that these funds are backed by the U.S. government, so they provide a cushion for your portfolio during times of market turmoil.

But here’s the interesting part: these funds not only offer safety, but they also come with higher yields. And the best part is, you don’t have to worry about credit risk, which can be a real concern during a recession when bond issuers struggle to repay borrowed money. This is particularly true for short-term bond funds, which have significantly higher yields compared to intermediate- and longer-term funds.

Let’s look at some numbers. According to Morningstar, the average yield on short-term government bond funds they track is now 3.8%, up from 1.8% just a year ago. Some top-rated funds are even offering higher yields. Take the Vanguard Short-Term Treasury ETF (VGSH), for instance, with a yield of 4.20% compared to 2.58% a year ago and a mere 0.12% two years ago. Impressive, right?

If you’re interested in short-term funds that invest in bonds maturing in one to three years, the Vanguard Short-Term Treasury ETF is the way to go, offering the highest yield at 4.20% as of May 19. Other options like the SPDR Portfolio Short Term Treasury ETF (SPTS) and Schwab Short-Term US Treasury ETF (SCHO) also offer similar yields.

Now, if you prefer intermediate-term Treasury bonds or bonds maturing in five to 10 years, there’s the iShares US Treasury Bond ETF (GOVT) rated Silver with a 3.9% SEC yield as of May 19.

This fund gives you exposure to the entire U.S. Treasury yield curve and has a longer duration of 6.2%. Another option is the Vanguard Intermediate-Term Treasury ETF (VGIT), with a slightly shorter duration of 5.2 years. Both of these funds have seen positive returns of over 2% this year.

So, if you’re looking for a safe investment with higher yields, U.S. Treasury bond funds might be just what you need.

More Resources from Wealthpin