The Schwab Short-Term U.S. Treasury ETF (NYSEMKT:SCHO) provides liquid exposure to government-backed debt, while the Vanguard Short-Term Tax-Exempt Bond ETF (NYSEMKT:VTES) looks better for investors seeking federal tax-free income.
These funds offer conservative exposure to short-term bonds but serve different tax purposes. SCHO focuses on highly liquid U.S. Treasury notes. At the same time, VTES targets investment-grade municipal bonds to provide income generally shielded from federal income tax and the federal alternative minimum tax.
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VTES
SCHO