Depends what your view is, what your investment objective is, and if you subscribe to timing the (interest rate) market.
Of course. And to clarify, my objective for my cash is income balanced with safety, and I do subscribe to timing the interest rate market here with real rates at zero, a .25% rate hike in December a virtual certainty, and additional hikes expected. So I stay focused on effective duration. I am taking very little interest rate risk with this holding, but, granted, it is not zero.
As of 9/27 Morningstar rates this fund with 1 star, indicates YTD it has returned 2.29%, and 0.29% for the past 1-month.
You have to look further than Morningstar's star rating. They are rating this compared to conventional high yield bond funds, to which it is not comparable. The 2.29% YTD return is for less than 9 months. It is over 3% annualized, as I said.
<i>Expenses for the fund is 0.87%. </i>
The expenses do not matter, since there is no truly comparable fund. It is a smaller fund and the fund's objective depends on heavily researching potential investments.
<i>The credit quality of the holdings is quite low at BB (below investment grade). This all indicates the fund is high risk. The only factor mitigating the risk is that the holdings are short-term. Understand that this is not comparable to US short-term cash-like funds. This is a short-term corporate bond fund.</i>
I understand what the fund is, yes. It is a specialized short-term bond fund with a very short effective duration.
<i>Looking on the fund's webpage at their entire list of holdings as of 8/31, the average maturity of holdings looks to be in the 2-3 year range...the top holding at almost 7% of the portfolio is a 5-year bond, and the top 10 holdings have over 15% of the fund at 4 to 5 year maturities.</i>
The effective duration is 120 days. The fund invests in securities expected to be called or subject to other corporate events which reduce the duration. If you notice, it is not volatile. The effective duration mitigates credit quality.
It is not for everyone. I am using it because i can get 2.0-3.25% return, with little rate risk, and keeping funds available. It is outperforming my cash alternatives and also outperforming my highly rated conventional short to intermediate bond funds.