With fixed deposit (FD) rates falling across Singapore, many investors are asking where they can park their savings for better returns without taking on too much risk. One option that has become increasingly popular is short-duration bond funds. These funds can offer higher yields than traditional FDs or T-Bills while maintaining relatively low volatility and providing flexibility for investors who may need liquidity. This guide explains how short-duration bond funds work, how they differ from other low-risk investments in Singapore, and what investors should consider before adding them to their portfolios. Why are Singaporeans turning to bond funds? In the current low-interest-rate environment, traditional safe havens like T-Bills, FDs, and Singapore Savings Bonds (SSBs) have seen yields decline. Recent examples include:

• The 6-month T-Bill auction on 9 October 2025 recorded a cut-off yield of 1.44% p.a., compared to 3.87% p.a. two years earlier.
• A 12-month fixed deposit from major banks such as DBS offers around 1.6% interest for deposits under S$20,000.

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