I started to rebuild my CD ladder about a year ago. Currently, it has three steps starting at 6mo, 1yr and 18mos. Come the first part of April when I have one coming due I plan to add the fourth step and move maturity out to 2yrs. This will give me a four step ladder with maturities coming every six months. I treat CD's as part of my cash allocation while short term bond funds were/are treated as part of my bond allocation.

MIkeM It sounds like you are saying short-term bonds do not make sense in this present investment environment.

Yes, that is what I'm saying.
Look at the performance of BBMX, 1.7% return over the last 3 years, 1.3% over the last 5. With rising interest rates short term bond funds will be challenged to make even that return going forward. In comparison, CDs are now paying 2% for 1 year and up to 3% for 5 years. And the point here, I think, is if you create a CD ladder where you are converting CDs periodically as they mature into a CD market of risings interest rates it's a win-win investment as compared the short term bonds that will be affected negatively with rising rates.
This maybe wasn't true a year ago, but I think the time has come. Eliminate volatility and a guess on return completely and CD ladder into a rising return. That of course is just my opinion.
By the way, this is what I'm going to do with the money I'm bucketing for retirement withdrawals. I happen to choose Synchroney Bank to set up my money market/CD IRA, but there are many good on-line options available.

hmm ... how does one become an AP? can you lose money? (seems so, not sure)

The short answer is that you sign a contract with an ETF distributor that allows you to buy and sell creation units of the ETF.
Here's a sample AP agreement I pulled up at the SEC site. (I've never read one of these, have no desire to; a quick skim of the headings suggests this agreement is pretty basic.)
https://www.sec.gov/Archives/edgar/data/1414040/000119312513132740/d513469dex99e2.htm
For a more complete answer, here's ICI's "The Role and Activities of Authorized Participants of Exchange Traded Funds".
https://www.sec.gov/Archives/edgar/data/1414040/000119312513132740/d513469dex99e2.htm

What Is an AP?
An AP is typically a large financial institution that enters into a legal contract with an ETF
distributor to create and redeem shares of the fund. APs play a key role in the primary market for ETF shares because they are the only investors allowed to interact directly with the fund. ...

You're correct that there is some risk for APs. On the other hand, while they're allowed to make money via arbitrage (e.g. buying an ETF for less than the value of its components and then selling the underlying securities), they are not required to participate.
In theory you could have an ETF where no AP stepped in to stabilize its market price (relative to its NAV). ICI seems to think this isn't a big deal. Some people here, myself included, might disagree. In its paper, ICI writes:

It is important to remember that even if no APs ...step forward to create and redeem [ETF shares], the affected ETF shares would ... trade like closed-end funds. In addition, the effects would [be] contained to the affected ETFs and not transmitted to other ETFs or the underlying securities markets

Hi @Bobpa,
All three of the funds that I sold (FMTNX, LALDX & THIFX) had nav negative growth over the past 1, 3 & 5 year periods. In short, their yield was greater than their ability to produce same. I'm with @MikeM as I'm thinking CD's are currently a better deal presently over most short term bond funds.
Here is a link to the one, three and five year performance for LALDX. Notice its yield of 3.70% is greater than its return numbers which are listed at 1 year @ 1.54% ... 3 year @ 1.98% ... and, 5 year @ 1.87%.
http://www.morningstar.com/funds/XNAS/LALDX/quote.html
A couple of Lord Abbett income funds that I own and have been able to produce their yield (and more) are LBNDX (Lord Abbett Bond Debenture) and ISFAX (Lord Abbett Multi Asset Income). ISFAX has a yield of 3.58% with 1 year performance listed at 6.17% ... 3 year @ 4.25% ... and, 5 year @ 5.03%. LBNDX has a yield of 4.15% with 1 year performance listed at 5.69% ... 3 year @ 5.36% and 5 year @ 5.75%. Thus they have produced their yield and then some.
When an income fund can not make it's distribution for a good number of years, from my perspective, it's time to let it go and I did. This is the reason I no longer hold LALDX ... FMTNX ... and, THIFX. I'm thinking it will only get worse for these funds as interest rates rise so I let them go.
Old_Skeet

Any opinions on these funds? BBBMX EALDX LALDX THOPX

@Bobpa, yes, they all have the same thing in common. Based on YTD, 1, 3 and 5 year return history, they will all earn less than CDs.

Hello,
I sold three of my bond funds yesterday ... FMTNX ... LALDX ... and, THIFX. And, redeployed most of the capital into BAICX ... CTFAX ... and, PMAIX along with sending some to my cash sleeve for perhaps another spiff.
This leaves my income sleeve holding the following funds: BAICX, CTFAX, GIFAX, LBNDX, NEFZX & TSIAX. Interestingly, a little better than 80% of the sleeve remains invested in bonds from a review of the ticker symbols and their weightings inputed into Instant Xray for analysis. These changes, by my thinking, should help better position the sleeve for a rising interest rate environment. Some noteworthy features of the sleeve are a yield of 3.75%, average duration of 2.6 years and average maturity of 5.35 years along with the prior 12 month total return found to be 4.75%. Currently, PMAIX is held in my global hybrid sleeve found in the growth & income area of the portfolio. This sleeve also holds CAIBX and TIBAX.

@Bobpa & MFO Members: Here is U.S. News & World Report's ranking of the best 75 Short-Term Bond Funds.
Regards,
Ted
https://money.usnews.com/funds/mutual-funds/rankings/short-term-bond
BBBMX: Not Ranked
EALDX: #2
LALDX: #16 (I've owned from time to time.)
THOPX: #3

FYI: Last summer, Goldman Sachs even questioned whether the markets were witnessing the death of value investing.
But if the recent market swoon world-wide is any indication, value stocks could be poised for a comeback, according to an analysis by Morgan Stanley.
Value stocks have historically tended to outperform growth in high-volatility environments, as investors seek what are perceived as safer and steadier stocks. Morgan Stanley defines high volatility as being when the Cboe Volatility Index—a commonly used measure—rises over 30. The VIX surged 116% on Feb. 5, its biggest one-day gain ever, finishing that day at 37.3, its highest since Aug. 2015.
Regards,
Ted
http://www.cetusnews.com/business/It-Might-Finally-Be-Value-Stocks’-Time-to-Shine.BJ7mINM7Pz.html

He wrote that if the investors bought a fund via ETF shares, they underperformed by around 1.6% over the period examined. But investors who bought the same fund via open end shares slightly outperformed the fund.

@msf, Agree. Underperforming by 1.6% is sizable. Long holding period, i.e. 10 years or so may reduce the difference. By the same token, what is the point of ETFs other than ease of trading?

FYI: After laying low for several quarters, inflation is again on investors' list of worries. This is reflected in the widening spread between the yield on 10-year Treasury bonds and 10-year Treasury Inflation-Protected Securities--the so-called break-even inflation rate--which is often viewed as a market-based proxy for investors' inflation expectations. After steadily falling to 1.66% in late June, the break-even inflation rate ratcheted wider over the back half of 2017 and so far in 2018; it was over 2% as of Feb. 9.
Regards,
Ted
http://www.morningstar.com/articles/850077/10-top-picks-to-fight-inflation.print.html
M*: Inflation-Protected Bond Fund Returns:
http://news.morningstar.com/fund-category-returns/inflation-protected-bond/$FOCA$IP.aspx

Sometimes we overlook the obvious. So, a statement of the obvious (which we all know) is: “While your investment grade bond fund’s NAV fell today, the rate of return you are now earning just went up”. Should bond prices stabilize, you’re probably better off today than you were yesterday. Not intended to be a ringing endorsement of bonds. Long term I’m not optimistic. The reasons why rates should continue to rise are legion. I don’t need to restate them. As Ralph Kramden might say, “To the moon... #*@# ”
—
Also, the media often promotes a misconception that the FOMC “sets” long-term rates. They do not. What they “set” is the overnight lending rate that banks charge one another on overnight loans. Yes, this and other Fed actions may affect longer term rates. But the result is not always as expected. For example, if it pushed short term rates too high it could actually have the opposite effect on the longer end, causing the 10-year or 30-year rate to fall in anticipation of a recession.

Josh Brown, meet Jack Bogle (who never met an ETF he liked - by design they encourage trading).
Jack Bogle: the lessons we must take from ETFs (FT, Dec 11, 2016)

Individual investors are by far the largest holders of the Vanguard [traditional index funds], with annual redemption rates in the range of 8 per cent of assets. Banks and financial intermediaries hold almost 90 per cent of SPDR S&P 500, where the dollar value of annual turnover typically runs to some 3,000 per cent of assets

The only way an ETF can have an outflow is if authorized participants (APs) redeem shares. Otherwise, investors are merely trading among themselves, neither buying new shares nor redeeming existing shares.
APs act only if there is significant tracking error between the ETF price and the underlying portfolio value. For example, when the market is rising, but buyers aren't rushing to buy the ETF, the ETF price may lag. APs will swoop in and buy "cheap" (rising but underpriced) ETFs, redeem them, and then sell the underlying stocks at a profit.
So rapid outflow (redemptions by APs) could be caused by lack of ETF trading, just as it could be caused by excessive trading (e.g. pushing the ETF price down below the underlying portfolio's "true" value). A direct causal relationship between ETF outflow (i.e. AP redemptions) and ETF trading volume doesn't seem clear to me.
Regarding the "active" use of ETFs, Bogle looked at how owners of Vanguard index funds did during a few months of 2016. He wrote that if the investors bought a fund via ETF shares, they underperformed by around 1.6% over the period examined. But investors who bought the same fund via open end shares slightly outperformed the fund.

I've gotten more and more down on bonds over the past decade, as bond yields have gone down more and more. A year ago, I would have suggesting sticking with banks/CUs alone and forgetting about bonds. Yields have come up a bit, IMHO enough to make it worth considering bonds again.
You might take a look at FPNIX. The managers of this fund (first Rodriguez, now Atteberry) use somewhat esoteric devices (e.g. credit enhanced ABSs for credit risk protection, Interest Only (IO) bonds to reduce duration) to reduce, not increase, risk. This fund has not lost money at in any calendar year going back at least to 1992.
Its current SEC yield (as of 12/31/17) is 2.84%, and current yield to worst (i.e. assuming every bond in the portfolio actually yields the worst possible amount) is 2.95%. Its duration is just 1.5 years, and it's investment grade (M* puts it at BBB, almost 90% are A or better).
FPINX fact sheet: http://www.fpafunds.com/docs/fund-fact-sheets/fpa-new-income-factsheet-2017-12.pdf
If you like CDs, and are a veteran or a relative of a veteran, you might look at Navy Fed - it's offering a 15 month CD paying 2.25%. It offers the flexibility of adding money, but only up to $50K.
https://www.navyfederal.org/products-services/checking-savings/certificates.php

@Mark: OGINX was down -42.11 in 2008 alone.

FYI: As investors sift through the rubble from last week’s equity rout, a blemish has appeared on what had been one of the hottest trades among quantitative investors -- low volatility.
The approach ostensibly offered protection from equity gyrations by betting on stocks that have historically swung less than the overall market. But when the S&P 500 Index registered its worst week in two years, exchange-traded funds geared to low volatility sold off nearly as forcefully.
Regards,
Ted
https://www.bloomberg.com/news/articles/2018-02-14/favored-quant-trade-blemished-in-last-bout-of-market-volatility?srnd=etfcenter

@willmatt72: I fixed your Reuters link.
Regards,
Ted
https://www.reuters.com/article/us-usloan-2018/u-s-loan-funds-remain-appealing-in-2018-as-fed-hikes-rates-idUSKBN1F62G7

Bank loans/floating rate funds are one possible option in a rising rate environment. Also, you would benefit from staying in a short to intermediate duration for your bond funds.
https://reuters.com/article/us-usloan-2018/u-s-loan-funds-remain-appealing-in-2018-as-fed-hikes-rates-idUSKBN1F62G7

Good article. Maybe I think that because this approach is what I do. 1/2 my tax deffered retirement money is in a stable index investing robo-portfolio and the other 1/2 I self manage.
Definition I found for smart beta:

Smart beta strategies attempt to deliver a better risk and return trade-off than conventional market cap weighted indices by using alternative weighting schemes based on measures such as volatility or dividends.

are long-term in nature and by no means tactical.

This appears to be your opinion. I don't see any definitions using this caveat in my short check of Google.
And the author says:

A core-satellite approach is a great way to focus on long-term capital growth, while still allowing for the opportunity to juice returns through active portfolio management.

I don't know, seems like a similar approach to me.

Sorta sounds like what I’ve gravitated to over the years. Except I don’t use index funds. Core = a diversified balanced portfolio (about a dozen funds) that rarely gets traded. Pretty much a sleep-well mix. Flexible portion = cash / cash-like holdings plus riskier investments. The Flex part I can vary at will.
As I’ve aged, I’ve slowly increased the Core portion from around 50% two decades ago to 75% today. By the time I’m too old to remember who I am, I hope to have moved to 100% Core. Than I’ll keep my hands off everything and just let it ride.
Not a recommendation for others. Not going to beat the market either. A good sleep well approach that keeps ya from mucking things up too badly.

FYI: U.S. insurer MetLife Inc on Tuesday said internal failures that resulted in its not making payments to thousands of pensioners stretched back a quarter of a century and it would take a major effort this year to fix the problems.
Regards,
Ted
https://www.fa-mag.com/news/metlife-says-pension-failures-go-back-25-years-37158.html?print
Its All Because They Dumped Snoopy And The Peanuts Gang:
http://money.cnn.com/2016/10/20/investing/metlife-snoopy-peanuts-blimp/index.html