ETF Put cash to work with short duration ETFs

Jason Bloom
• Head of Fixed Income & Alternatives ETF Product Strategy
August 26, 2026

What to do with too much cash?

Many investors have been sitting in cash. And sure, it can feel safe in uncertain times. And there’s a lot going on these days. But holding too much cash may be the wrong kind of caution.

The current macro backdrop is one of resilient growth, which has been counter to many forecasters' expectations. Much of this growth is due to the historic capital expenditure, or CapEx, spend on infrastructure and equipment in the race to build out AI computing capacity. Hyperscalers, companies that provide massive-scale cloud computing services and infrastructure, are set to spend roughly $750 billion on AI infrastructure this year.1 That’s about 70% year-over-year growth.2 And that capex is flowing straight into the real economy. But with that demand comes a supply-side inflation problem. Many basic industrial materials and equipment are in short supply — and this explosion in demand is driving up prices for everything from copper to computer components and power-related equipment.

Then there’s the continued uncertainty in the Middle East and its impact on oil prices. Plus, the Federal Reserve has a new leader, and it’s turned hawkish, with markets now pricing interest rate hikes rather than cuts.

Step out along the yield curve with short maturity investment grade corporate debt

And that’s why when it comes to fixed income, I believe this environment makes a case for stepping out into corporate credit exposure without stepping out along the duration curve. And that means considering short-maturity investment-grade corporate debt. It offers the potential to earn higher yields than cash and Treasury bills while taking advantage of the supportive macro environment for investment grade corporate debt. Consider Invesco Ultra Short Duration ETF (GSY).

Sidestep duration-based volatility with short floating rate coupons

Another option to consider is short floating rate coupons, which may allow investors to sidestep any duration-based volatility. If short-term rates move higher, the yields on them can reset higher along the way. So consider Invesco Variable Rate Investment Grade ETF (VRIG).

Additional ETF resources

  • 1

    Source: Credit Sights, “Tech: Raising Hyperscaler Capex 2026 Estimates,” Feb. 2, 2026.
  • 2

    Source: Yahoo Finance, “Magnificent 7' earnings rush reveals AI spending surge, with hyperscaler capex set to reach $725 billion in 2026,” April 29, 2026.

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