Volumes and fund flows into short duration Treasury bill funds have soared in the past week as investors seek protection against rising interest rates. Those safe havens, however, may pose big risks over their own, and might not yield high returns sought by investors. Investors have flocked to this relatively risk-free investment vehicle as bond funds drop and stock indexes like the S&P 500 have their worst year since 2008's Great Recession. Just days after the Federal Reserve announced yet another 75 basis point rate hike, the policy-sensitive two-year note surged to 4.1%. Yesterday, the benchmark 10-year yield rose to 3.97%—just a touch under the 4% that was last traded in 2008, and on track for its sharpest recorded annual rise. Interest in short-term Treasury ETFs have surged in the past few days, with the iShares 1-3 Year Treasury Bond ETF (SHY) pulling in almost $1.1 billion in assets just last week. The Vanguard Short-Term Treasury Index ETF (VGSH) and the Schwab Short-Term U.S. Treasury ETF (SCHO) have similarly seen increased volumes. But analysts warn that short duration Treasury notes—typically considered safe havens during times of market stress—may not be the best deal at the moment as bond yields skyrocket. Bond yields move inversely to prices. “Money flowing into the one- to three-year Treasury sector hasn't worked out all that well,” Kevin Flanagan, head of fixed income strategy at WisdomTree, said in an interview. He noted that the fixed coupons on short duration Treasury bills as well as the increasing pressure on yields following the Fed’s rate hikes increase the risk of losing money invested in the short-term notes. Floating rate funds such as the WisdomTree Floating Rate Treasury Fund (USFR) and the iShares Treasury Floating Rate Bond ETF (TFLO) have outperformed their longer duration counterparts. Flanagan said he favors Treasury floating rate notes, which “float with this three-month T-Bill option every week.” “The only place you could really hide is within the floating rate note area of treasuries because you get that weekly reset,” he added.