Vanguard Short-Term Treasury ETF

VGSH

Market cap $24.8B

Vanguard Short-Term Treasury ETF (VGSH) and Schwab Short-Term U.S. Treasury ETF (SCHO) are both rated Buy for short-term U.S. Treasury exposure. VGSH is slightly superior due to its better liquidity, larger fund size, and higher 30-day SEC yield compared to SCHO. Both ETFs offer low expense ratios, minimal volatility, and are well-positioned for the current uncertain interest rate environment.

Orser Capital Management increased its Vanguard Short-Term Treasury ETF stake by almost 92,000 shares. The $5.40 million trade represented almost 3% of the firm's assets under management (AUM).

Bond ETFs like SGOV and SCHO gain traction as Treasury yields sink to three-year lows, reflecting rising investor caution amid mounting market stress.

These Gold-rated ETFs effectively control risk and deliver yield.

With stock market valuations at historic highs, short-term Treasuries like VGSH now offer a compelling risk/reward profile for risk-averse investors. VGSH's 4.11% yield currently exceeds the S&P 500's earnings yield, a rare occurrence that favors bonds over equities for the next decade. While stocks could still outperform, the probability of disappointing returns is high, making low-risk options like VGSH prudent for capital preservation.

Long-term U.S. treasuries were pushed lower Tuesday as the ouster of Federal Reserve Gov. Lisa Cook by President Donald Trump fueled uncertainty regarding the independence of the central bank and monetary policy direction.

Stanley Druckenmiller's bet against America's debt is no ordinary trade.

In times of uncertainty in the bond market, there's one thing for certain. And that's that deciding where to get exposure can be complex.

VGSH offers critical de-risking benefits, reducing portfolio noise, drawdown drag, and providing liquidity unmatched by longer-duration bonds. Data shows blending VGSH with equities significantly lowers volatility and drawdowns, supporting better long-term compounding and investor discipline. VGSH's low correlation with equities and tight return distribution provide portfolio ballast, behavioral stability, and rebalancing opportunities during market stress.

Given the large pool of options available to fixed income investors in the bond market, the ideal option given the current economic uncertainty is still Treasuries. With that, Vanguard has three options worthy of consideration for any portfolio.