SDSI ETF targets short-duration income amid rising rates

American Century Investments’ Short Duration Strategic Income ETF (SDSI) is an actively managed fund launched in 2022 that seeks income from short-duration fixed income. The fund’s expense ratio is 0.32% (32 basis points). As of April 30, American Century reported a 4.91% 12-month distribution rate and a 5.6% yield to maturity.

The strategy targets securities with an average weighted duration of about three years or shorter. American Century describes the fund’s aim as ‘high current income, broad diversification, and the potential to mitigate the impact of rising rates.’ Holdings can include bank loans, asset-backed securities and collateralized debt obligations. The fund may also use derivatives and currency contracts to hedge or enhance returns.

Shorter duration reduces price sensitivity to interest-rate moves because bond prices change less when rates shift. The fund’s mix of loans and structured products can offer higher yields than short-term government debt while carrying credit and liquidity risks.

Data show SDSI returned 5.65% over the past three years, compared with a 4.1% average for the total bond market category as of May 22. The fund’s active management seeks to rotate among short-dated, higher-income instruments and to limit portfolio duration.

Market conditions in 2026 have featured persistent inflation and geopolitical tensions that have pushed back expectations for near-term rate cuts and reopened the possibility of further rate increases. American Century states its active approach evaluates current and prospective rate conditions when selecting holdings. Full fund documents and performance details are available from American Century.