Top Performing Short-Term Bond Funds for September 2025

Investing for short-term goals can be a strategic move, and short-term bond funds are a popular choice for many investors. These mutual funds and exchange-traded funds (ETFs) typically invest in government and corporate bonds with maturities of less than five years.

Two of the most notable short-term bond ETFs in the market are the Vanguard Short-Term Bond ETF (VBS) and the Schwab 1-5 Year Corporate Bond ETF (SCHO). Both focus on U.S. corporate bonds with maturities between one and five years.

As of August 28, 2025, the Vanguard Short-Term Bond ETF has an SEC yield of 3.91 percent, while the Schwab 1-5 Year Corporate Bond ETF boasts a slightly higher yield of 4.34 percent. The expense ratio for both ETFs is impressively low, with Vanguard at 0.03 percent and Schwab at an even lower 0.03 percent.

The Schwab ETF manages assets worth $577.0 million, while Vanguard's Short-Term Bond ETF has a staggering AUM of $63.9 billion.

Another contender in the short-term bond ETF market is the Fidelity Short-Term Bond Fund (FSBTX). This fund has a higher expense ratio compared to the other two, at 0.30 percent. However, it currently manages assets worth $2.5 billion. The SEC yield for FSBTX is 4.03 percent.

Investors should note that the iShares 1-5 Year Investment Grade Corporate Bond ETF does not provide specific maturity details but focuses on investment-grade corporate bonds. The SPDR Portfolio Short-Term Corporate Bond ETF aims to track the performance of the Bloomberg U.S. 1-3 Year Corporate Bond Index and offers exposure to U.S. corporate bonds with maturities between one and three years. As of August 28, 2025, it has an SEC yield of 4.23 percent, an expense ratio of 0.04 percent, and an AUM of $8.4 billion.

It's essential for investors to conduct their own independent research before making an investment decision. Remember that past performance is no guarantee of future price appreciation.

Bonds with shorter times to maturity are less sensitive to changes in interest rates than longer-term bonds, making short-term bond funds a potentially attractive option for many investors, particularly those saving for short-term investment goals.

For those seeking even less risk, money-market funds could be considered as they offer yields.

Lastly, pay special attention to a fund's expense ratio before investing, as lower fees can benefit investors in the long run.