Vanguard Short-Term Treasury ETF

VGSH

Market cap $22.8B

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.

If you think there is heightened market complacency and inflation risks are underestimated, these ETF strategies can prove fruitful to you.

Moody's U.S. downgrade sparks debt fears and bond market jitters. This is how smart ETF strategies can help navigate the storm.

Market volatility isn't isolating itself to stocks. The bond market has had its fair share of fluctuations.