The bond market is weighing uncertainties about the job market, tariffs, and now the war in Iran. As the price of oil has jumped, investors are also considering its potential to boost inflation in the months ahead. Morningstar Chief US Market Strategist Dave Sekera notes, “Fixed-income indices have struggled to show gains this year as rising interest rates have largely offset yield carry.” As of March 16, the Morningstar US Core Bond Index has risen just 0.38% for the year to date.Morningstar Senior Reporter Sarah Hansen does not anticipate big adjustments from this week’s Fed meeting. “Analysts and bond futures markets are confident that when the Fed meets on Wednesday, it will not make any changes to its policy rate, which is at a range of 3.50%-3.75%. However, the impact of the ongoing US war with Iran will undoubtedly shape the discussion and inform future decisions,” she says.Is a Short-Term Bond Fund a Good Investment?Morningstar Director of Personal Finance and Retirement Planning Christine Benz says whether or not to own a short-term bond fund should depend on your time horizon and when you need to tap into the money, not on what’s happening in the bond market. If you’re planning to spend these dollars in six to 10 years, intermediate-term core bond funds remain the place to be, she says. But if you’re saving for a shorter-term goal in the next three to five years, short-term bond funds remain better options.Read more: How to Pick the Best Active Bond ETFs and Mutual FundsInvestors looking for good short-term bond funds should prioritize those with low expense ratios, or fees. Fees eat into returns, so it’s especially important to favor low-cost short-term bond funds, whose return opportunity is, by their very nature, modest.Here is Morningstar’s list of the best short-term bond mutual funds and exchange-traded funds to invest in now.8 Best Short-Term Bond Mutual Funds and ETFs These funds land in one of the short-term taxable-bond Morningstar Categories and earn the top Morningstar Medalist Rating of Gold with 100% analyst coverage for one or more of their share classes as of March 2026.Baird Short-Term Bond BSBIXJP Morgan Limited Duration Bond ETF JPLD PGIM Short Duration Multi-Sector Bond Fund/ETF SDMZX PSDM Pimco Low Duration PTLDXSchwab Short-Term US Treasury ETF SCHOState Street SPDR Portfolio Treasury ETF SPTSVanguard Short-Term Corporate Bond Index/ETF VSTBX VCSHVanguard Short-Term Treasury Index/ETF VSBIX VGSHHere’s a little bit about each of these ETFs and mutual funds. All data is as of March 9, 2026.Baird Short-Term BondMorningstar Category: Short-Term BondExpense Ratio: 0.30%Effective Duration: 1.85 yearsThis top-rated short-term bond fund is actively managed by an experienced team that invests in high-quality corporate bonds and securitized credit, as well as government bonds. The team keeps the fund’s duration (a measure of interest rate sensitivity) in line with the Bloomberg US 1–3 Year Government/Credit Index’s, and it adds value through adept security selection and sector allocation among corporate, securitized, and government bonds. The fund takes on more credit risk than its index, but it remains a good choice for investors in search of a conservative short-term bond fund, notes Morningstar Director Alec Lucas.Read more about Baird Short-Term Bond Fund.JP Morgan Limited Duration Bond ETFMorningstar Category: Short-Term BondExpense Ratio: 0.24%Effective Duration: N/AJP Morgan converted this one-time mutual fund into an ETF in mid-2023. The management team emphasizes short-term mortgage and asset-backed securities. Stringent security selection and stable duration are hallmarks of the strategy at this highly rated fund, which is why this ETF has been less volatile than some of its peers, explains Morningstar Senior Analyst Paul Olmsted. The managers also deemphasize lower-yielding US Treasuries relative to their loose index, the Bloomberg US 1-3 Year Government/Credit Index.Read more about JP Morgan Limited Duration Bond ETF.PGIM Short Duration Multi-Sector Bond Fund/ETFMorningstar Category: Short-Term BondExpense Ratio: 0.40% (mutual fund and ETF)Effective Duration: N/ANext on our list of the best short-term bond funds, PGIM Short Duration Multi-Sector Bond is an attractive option for investors willing to take on a bit more risk, says Morningstar Director Eric Jacobson. The managers of this top-rated fund attempt to outperform their benchmark, the Bloomberg US 1-3 Year Government/Credit Index, by 150 basis points annually with a flexible mandate that at times delves into non-US developed- and emerging-market debt. The portfolio is often closer to the long end of its short-term bond category.Read more about PGIM Short Duration Multi-Sector Bond.Pimco Low Duration Morningstar Category: Short-Term BondExpense Ratio: 0.46% Effective Duration: 2.06 yearsPimco Low Duration’s multiyear defensive posture has come at the cost of forgone total returns during risk-friendly markets, but it should offer investors a smoother ride long-term. The strategy features a deep manager bench and a diversity of experience. It uses a narrowly constructed benchmark, the Bank of America Merrill Lynch 1-3 Year Treasury Index. Pimco Low Duration’s defensive merits should become apparent when markets inevitably turn rocky, says Morningstar Senior Principal Mara Dobrescu. Read more about PIMCO Low Duration.Schwab Short-Term US Treasury ETFMorningstar Category: Short-Term GovernmentExpense Ratio: 0.03%Effective Duration: 1.89 yearsSchwab Short-Term US Treasury ETF is the first name on our list of the best short-term bond funds from the short-term government-bond category. This passive bond ETF tracks the Bloomberg US Treasury 1-3 Year Index. It’s a tough fund to beat in its category, given the efficiency of the very liquid US Treasury bond market and the ETF’s razor-thin expenses, explains Morningstar Analyst Zachary Evens. Credit risk is nonexistent here, given its focus; interest rate risk is damped with its focus on the short end of the yield curve.Read more about Schwab Short-Term U.S. Treasury ETF.State Street SPDR Short Term Treasury ETFMorningstar Category: Short-Term GovernmentExpense Ratio: 0.03%Effective Duration: 1.88 yearsThe second low-cost passive ETF investing in short-term Treasuries on our list, SPDR Portfolio Treasury ETF, is managed by State Street. As with Schwab’s similar offering, this top-rated ETF maintains virtually no credit risk since it holds only US Treasuries, and it poses limited interest rate risk, as it favors the short end of the yield curve.Read more about SPDR Short-Term Treasury ETF.Vanguard Short-Term Corporate Bond Index/ETFMorningstar Category: Short-Term BondExpense Ratio: 0.03% (mutual fund), 0.03% (ETF)Effective Duration: 2.64 yearsThis index fund—available as both a mutual fund and as an ETF—tracks the Bloomberg US 1–5 Year Corporate Bond Index, which features US investment-grade corporate bonds with between one and five years in remaining maturity. Like some other funds featured here, this fund takes on a fair amount of credit risk. That being said, the fund provides accurate access to the short-term investment-grade bond market at a low cost and has been a competitive long-term performer, observes Morningstar Analyst Lan Anh Tran.Read more about Vanguard Short-Term Corporate Bond.Vanguard Short-Term Treasury Index/ETFMorningstar Category: Short GovernmentExpense Ratio: 0.03% (mutual fund), 0.03% (ETF)Effective Duration: 1.88 yearsRounding out our list of the best short-term bond funds to buy now, Vanguard Short-Term Treasury invests exclusively in short-term US Treasuries. An index fund that’s available as both a mutual fund and an ETF, it tracks the Bloomberg US Treasury 1–3 Year Index, which, as its name suggests, focuses on US Treasuries with one to three years until maturity. Given its very high-quality focus, the fund takes on minimal credit risk. Interest rate risk holds more influence over performance, but given the fund’s emphasis on the short end of the yield curve, even that risk is muted, reminds Morningstar’s Evens. Ultralow expenses only add to the appeal here.Read more about Vanguard Short-Term TreasuryHow to Find More of the Best Bond ETFs and Mutual Funds for the Long TermGiven their high Morningstar Medalist Ratings, we expect the top-rated mutual funds and ETFs on our list to outperform over a full market cycle.That being said, investors may want to expand their search for bond funds beyond this list, using parameters that matter to them. Here are two additional ways to find dividend ETFs and mutual funds to investigate further. Some investors may prefer a list of highly rated funds that invest in bonds around the globe, not just in US names.Morningstar.com provides lists of bond funds, as well as a collection of our bond-related articles, at Morningstar.com/bonds.Under Morningstar’s Best Investments, you will find lists of our Morningstar Medalist bond funds. Click here and scroll down to “Medalist Bond Funds.”