Schwab Plans 3 Ultra-Short-Bond ETFs

August 05, 2013

The firm plans to add three ultra-short-duration fixed-income ETFs to its lineup.

Schwab filed paperwork proposing three short-term, target-duration bond funds, the latest sign that fund sponsors are looking to provide investors with more choices to effectively manage an environment of rising interest rates.

  • The Schwab TargetDuration 2-Month ETF
  • The Schwab TargetDuration 9-Month ETF
  • The Schwab TargetDuration 12-Month ETF

While the filing came just two days after the Fed’s decision to continue its monthly $85 billion bond-buying program, investors have begun in recent months to shift bond holdings to the short end of the yield curve to manage interest-rate risk before the Fed begins to normalize borrowing rates. The three Schwab funds fit the bill perfectly, allowing investors to eke out a bit of return without the heightened risk that bond investments further along the curve can subject them to.

All three funds will make use of similar investment and security-selection strategies, with the principal difference between the three being their respective target durations of two, nine and 12 months.

The securities within the funds’ portfolios will be investment-grade, dollar-denominated debt from U.S. as well as foreign issuers. The debts purchased by these funds will have a rating of or be equivalent to at least A- per Standard & Poor’s Financial Services.

None of the funds yet has a ticker or price, but the prospectus did say that the three funds would have their initial listings on the New York Stock Exchange’s electronic platform, Arca.



Lean why bond ETFs are an essential part of a diversified portfolio with our bond ETF channel.

Learn how currency-hedged ETFs can reduce the currency risk in your portfolio.


Investors took profits on U.S. equity ETFs on Friday, Nov. 20.

Top three issuers saw net inflows in their products on Monday, Nov. 23.


By Dave Nadig

With the SEC looking to regulate liquidity, should bond ETF investors worry?

By Matt Hougan’s conference offered several actionable ideas for investors.

By Dave Nadig

The exchange just proposed the latest rule to reinvent history on bad ETF trades.

By Matt Hougan

Best deal in the history of finance gets better.


By Nicholas Kalivas

The case for low-volatility, currency-hedged exposure in Europe.

By Nick Stonestreet

ETF firm builds out its business.

By Nicholas Kalivas

A sector-momentum strategy may be just what your portfolio needs in the current market environment.