What can bond ETFs do for you?


A money market fund or deposit account may help protect the nominal value of your cash, but you may be missing out on a chance to keep up with inflation and grow it with interest from bonds.1

Today, most bank accounts offer a minimal amount of interest. Even bank certificate of deposits (CDs) and money market funds don’t typically provide enough yield to keep up with inflation. That means that the purchasing power of your cash can diminish as inflation eats away at it over time.

Short duration bond ETFs can potentially add more income while helping you step out of cash and meet short- or long-term investment goals.

Average yield for cash, cash alternatives and short duration bond ETFs

Chart showing average yield for cash, cash alternatives and short duration bond ETFs

Source: Bloomberg, Morningstar, FDIC, BlackRock, as of 3/31/22.


“Money Market Fund” represents 2a7 Money Market Funds and is calculated using the Weighted Average 7-Day Yield of the Morningstar “Money Market – Taxable” Category. “Savings Account” and “12 Month Bank CD” are the average APY rate of all FDIC-insured savings and 12-month bank CDs. iShares and BlackRock ETF yields represent the 30-Day SEC Yield. It’s important to note that there are material differences between Savings accounts, Money Market Funds, CDs and ETFs, including investment objectives, risks, fees, and expenses. CDs are fixed income investments that generally pay a set rate of interest over a fixed time period until maturity, whereupon the original principal is typically returned plus any interest earned. Early withdrawal from CDs may result in early withdrawal fees. Most savings accounts pay compound interest, meaning earnings are added to the balance to create a larger base on which future interest is paid. Most savings accounts allow you to add or withdraw money at any time without incurring a fee. Both Savings accounts and CDs principal investments are insured by the FDIC up to applicable FDIC limits, while ETFs are not FDIC insured and may lose value. Money Market funds typically seek to maintain a net asset value of $1.00 per share, but there is no guarantee they will do so and are not FDIC insured. Most ETFs seek to track an index, before fees and expenses. ETFs trade on exchanges intraday at market price, which may be greater or less than net asset value. Transactions in shares of ETFs may result in brokerage commissions and may generate tax consequences. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained. Short duration bond ETFs typically carry a higher degree of risk than the other cash alternatives and should not always be used as a substitute.


This information must be accompanied by a prospectus.


The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.iShares.com or www.blackrock.com. For standardized performance, please click here.


There’s no one-size fits all solution. For many, it helps to think of your cash in layers, and segment it based on how soon you will need to use it. Try segmenting your cash into short, medium and longer-term needs.

For instance, a segment can be cash that you need as soon as 0-3 months, 3-6 months, in the next 6-18 months, or 18 months and beyond. As a general rule, the sooner you will need to use each segment of your cash, the less risk you may want to take on with an investment.

Cash that will go unused immediately may be able to earn more interest for you now. The table below outlines a hypothetical cash segmentation framework.

Cash segmentation strategy sample


Hypothetical cash segmentation framework

Time HorizonImmediate-term (Less than 3 months)Short-term (3-6 months)Medium-term (6-18 months)Longer-term (18+ months)
Typical UseImmediate day to day expensesShort-term expenses and emergency fundsLarger future purchases or unexpected expensesLonger-term savings
Cash ObjectiveCapital preservation and daily accessStability with incremental incomeIncremental income with low riskGenerate income or growth with some risk
Investment TypeShort duration treasury market exposureUltra-short duration bonds and cash alternativesUltra-short duration bondsShort duration bonds

For illustrative purposes only.