A category of mutual funds that generally invest in fixed income securities, particularly bonds, with very short maturities (one year or less). The fund is designed to provide current income while allowing investors to preserve their invested capital. The objective is achieve high level of income, within its very short time horizon, consistent with minimal fluctuations in principal value (capital) and liquidity.

Due to the shorter time period, the fund is not impacted by changes in interest rates. In its maturity or up to its maturity date, the fund’s shares become due for payment (redemption). Like other bond funds, ultra-short bond funds invest in a wide array of debt securities and vehicles such as corporate bonds, government securities, mortgage-backed securities (MBSs) and other asset-backed securities (ABSs).

The risk associated with an ultra-short bond fund is higher than that of money market funds and other similar products with short term maturities (e.g., certificates of deposits). For that reason, an ultra-short bond fund aims generates higher yields than money market funds with less volatility.

This fund is also known as USBF.