VictoryShares Short-Term Bond ETF

VictoryShares Short-Term Bond ETF (USTB) is an actively managed fund from Victory Capital that holds more than 1,000 bonds, mostly issued by companies, plus Treasury notes and mortgage-backed securities. Its managers keep interest-rate sensitivity close to the Bloomberg 1-3 Year Credit Index and may put up to 20% in high-yield bonds. Its trailing 12-month yield was 4.52% as of October 27, 2026, but its 0.33% expense ratio is above the 0.14% average of similar funds.

• Over the year to Oct 27, 2026, USTB returned +2.6%, 3rd of 8 among similar funds.
• Its 5-year annualized return was +3.6%.
• Its worst full calendar year was 2022 (-2.8%); its best was 2023 (+6.7%).
• The deepest fall in its price history was 5% (Sep 9, 2021 to Oct 20, 2022), recovered by Jul 13, 2023.

As of Jun 30, 2026, the fund held 1,034 securities; the ten largest made up 10.13% of assets, and 6.65% sat in cash and money-market holdings.

The bonds mature in 12.6 years on average (weighted by size), with an average coupon of 4.86%.

• Over the three months to Jun 30, 2026, investors added a net $204.7M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.41%, +0.33%, +0.28%.

USTB does not track an index. Victory Capital manages it actively and chooses the bonds itself. The prospectus states the goal as high current income consistent with preservation of principal. At least 80% of net assets goes into debt securities. Effective duration measures how much a bond fund's price moves when interest rates change. The fund keeps its effective duration generally within one year of the Bloomberg 1-3 Year Credit Index's. The index sets a range for rate sensitivity. It is not a list of bonds to copy.

The adviser picks bonds by weighing yield, credit quality, structure (maturity, coupon and redemption features) and liquidity. Holdings are mainly investment grade. Up to 20% may be high-yield, or "junk," bonds, and up to 20% may be foreign debt, including emerging markets. As of June 30, 2026, the fund held 1,034 issues. Bonds and notes made up 64.66% of assets, mortgage-backed securities 28.52% and cash 6.65%. The 10 largest positions, mostly US Treasury notes plus a Citigroup bond, totaled 10.13%. There is no set rebalancing schedule. Reported portfolio turnover was 40%.

The fund may use futures, including Treasury futures, to adjust duration or hedge, though it held none as of June 30, 2026. Mortgage-backed securities repay principal gradually and may be paid off early when rates fall. The fund can pay out redemptions in cash. That may make it less tax-efficient than ETFs that redeem in kind.

• USTB charges 0.33% a year, versus an average of 0.14% for the similar funds below (6th of 8, cheapest first).
• Of that, 0.25% is the management fee; the rest covers other fund expenses.
• Using the prospectus's standard example, $10,000 invested would cost about $34 in the first year and $418 over 10 years (assuming a 5% annual return).

Its short duration and small past losses make it more of a stabilizer and near-term reserve than a source of growth.

USTB could hold money a retiree may need within a few years. It launched in October 2017, so it has no 2008 record. Its price data starts after the 2020 COVID crash, though it returned 5.14% for calendar 2020. Its worst calendar year was 2022, at -2.84%. In the 2022 bear market it fell 4.5% and was back at its earlier peak by July 13, 2023. Its deepest drop was 5%, from September 2021 to October 2022, and it took about nine months to recover. Someone who sold in that bad stretch would have taken a loss of a few percent, not a large one.

It pays monthly, and its trailing 12-month yield was 4.52% as of October 27, 2026. Its 0.33% expense ratio is above the 0.14% peer average, and up to 20% of the fund can be junk bonds. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).