Investing in short-term bond funds

Short-duration bond funds may offer more yield and total return potential relative to cash—and less volatility relative to longer-term bond portfolios that are more impacted by rising rates.

What is a short-term bond fund?

Short-term bond portfolios invest primarily in corporate and other investment-grade U.S. fixed-income issues.

Ultra-short bond funds generally maintain a duration of 1 year or less, and short-term bond funds generally maintain a duration between 1 to 3.5 years.

While duration is an important consideration, another key consideration is a fund’s credit quality exposure. While two funds may have the same duration, a difference in credit quality exposure can lead to very different returns depending on the credit environment in the market. It’s important that you know your risk tolerance related to both interest rate and credit volatility as you determine where to invest.

Why consider Fidelity for short-term bond funds

Fidelity offers a range of short-term bond funds across the risk spectrum, allowing our clients to tailor their exposure to their specific investment objectives and risk appetites.

Investment Experience

With over 50 years of experience in the credits markets, Fidelity’s fixed income team has navigated the bond market through various market environments.

Research Resources

Fidelity's research spans the capital structure and is committed to delivering independent and proprietary research on each bond purchased.

Focus on Risk Management

Multiple layers of oversight and a long-term commitment to risk infrastructure via technology.

Hear from Fidelity's fixed income experts

Why Invest in Short Term Bonds in Today’s Market Environment
Portfolio manager Julian Potenza explains why investors may find short-term bond funds attractive in the current environment.

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