Introduction

An encouraging outcome of the Federal Reserve's decision to increase rates is the resurgence of short-term bonds as a viable investment option after two decades. In the past, when interest rates were near zero, short-term fixed income investments provided minimal returns and made little impact on overall investment growth. However, the current scenario offers yields exceeding 4%, providing a stable way to combat inflation without the volatility of the stock market.

Enter the iShares 1-3 Year Treasury Bond ETF (SHY, $81.76). This exchange-traded fund specializes in holding a diverse range of U.S. government securities with maturities ranging from one to three years. At its current value, this ETF offers a risk-free yield of 4.6%, making it an attractive choice for those seeking a safe haven to allocate funds.

Bond risks can be evaluated in various ways. Credit risk pertains to the possibility of an issuer defaulting on payments. With the U.S. government's authority over financial resources, default is highly unlikely given its power to manage debts effectively. Additionally, interest-rate risk plays a role in bond investment. Bonds experience price drops when market yields rise, particularly long-term bonds, which saw significant declines compared to the S&P 500 last year.

The iShares 1-3 Year Treasury Bond ETF poses minimal credit risk and limited interest-rate risk due to its short-term nature. With an impressive yield of 4.6%, this ETF is a secure and beneficial investment option, positioning it as one of the top ETFs for investment opportunities on Wall Street. SEC yield signifies the interest earned after expenses deduction over a 30-day period and serves as a standard metric for assessing bond and preferred-stock funds.