The question is, are you willing to take some risk with the money, or no risk with the money?
If no risk, I would buy Treasuries that mature in 3 years, or possibly a CD. Buy the treasuries directly instead of owning them through a fund.
If you're willing to take some risk, I would put it in a diversified portfolio of bond funds (govt, corporate, intl, and a small part high-yield), and up to 10% in the stock market.