Guide · US Treasury (Short)
Best short-term Treasury ETFs
Short Treasuries are the cash sleeve in a lot of lazy portfolios, and a parking spot that still pays Treasury interest (state-tax exempt). SGOV and BIL are 0–3 month bills and barely move. VGSH and SHY are 1–3 year notes, duration around two years, so the price does move. USFR holds a handful of floating-rate notes that reset weekly. The composite's concentration score treats a 24-bill ladder as "concentrated," which is a ladder-length reading, not a credit reading.
Published Jul 8, 2026 · Updated Sep 16, 2026 · Fund data as of Oct 24, 2026
Why the ranking looks like this
The score order here needs a caveat. The 1-3 year funds (VGSH, SCHO, SHY) hold ~90-100 notes and post low top-10 concentration, while a T-bill ladder fund like SGOV holds ~24 bills (top-10 at 77%) and a floating-rate fund like USFR holds 5 notes (top-10 near 100%) — so the concentration sub-score pushes the bill and FRN funds down the leaderboard. For a single-issuer Treasury fund, the top-10 figure measures ladder length rather than issuer diversification — every holding is the same credit. Within a maturity band the ordering reduces to a cost-and-liquidity ranking; the bands themselves are different tools (see the closing notes).
See the methodology for the full formula behind each sub-score.
The funds
This order is editorial. The composite on each card is live. The full score-ranked table is on the category page.
-
89
composite / 100
Vanguard's 1-3 year Treasury index fund. 3 basis points — the cheapest in the category alongside SCHO — tracking the Bloomberg US Treasury 1-3 Year Index across ~100 notes. Slightly more rate sensitivity than a bill fund (duration around two years), which means modest price movement when rates move.
- Expense
- 0.030%
- AUM
- $39.49B†
- Issuer
- Vanguard
- Detail
- VGSH page →
-
86
composite / 100
iShares' 0-3 month T-bill fund and the largest fund in the category by AUM at ~$96B. 9 basis points, near-zero duration, and commonly cited on the Bogleheads forum as a brokerage cash substitute. Its 77% top-10 concentration reflects the short ladder rather than issuer diversification — see the scoring note.
- Expense
- 0.090%
- AUM
- $112.26B
- Issuer
- iShares
- Detail
- SGOV page →
-
84
composite / 100
State Street's 1-3 month T-bill fund — the original mass-market bill ETF, listed in 2007. Functionally interchangeable with SGOV at a somewhat higher fee (13.5 bp vs 9 bp); its long trading history and deep options market keep it in wide institutional use.
- Expense
- 0.14%
- AUM
- $49.79B
- Issuer
- State Street
- Detail
- BIL page →
-
83
composite / 100
WisdomTree's Treasury floating-rate note fund. Holds a handful of 2-year FRNs whose coupons reset weekly off the most recent 13-week bill auction, so yield tracks the front of the curve with effectively no duration. The 5-holding ladder reads as ~100% top-10 concentration in our composite — the same short-ladder reading described in the scoring note, only more so.
- Expense
- 0.15%
- AUM
- $19.78B
- Issuer
- WisdomTree
- Detail
- USFR page →
-
83
composite / 100
iShares' 1-3 year Treasury fund, at 15 bp the priciest of the 1-3 year trio but the one named in the published Permanent Portfolio and Golden Butterfly allocations on this site. VGSH and SCHO offer near-identical 1-3 year Treasury exposure (a different index family) at a fifth of the fee.
- Expense
- 0.15%
- AUM
- $26.28B
- Issuer
- iShares
- Detail
- SHY page →
† Whole fund: this ETF is one share class of a fund that also sells mutual-fund shares, and the figure covers all of them. Our sources don't report the ETF class on its own.
Also in the category
Other funds in the same category, ranked by composite score.
Treasury interest is state-tax exempt
Interest on US Treasury obligations is exempt from state and local income tax, and that exemption passes through fund distributions in proportion to the fund's US-government-obligation income. For a pure Treasury fund that proportion is at or near 100%. A money market fund or high-yield savings account paying a similar headline rate delivers less after tax in states with an income tax — the gap is largest in California, New York, and other high-rate states. A few states (California, New York, Connecticut) require a fund to hold at least 50% US government obligations for the exemption to apply at all, a threshold pure Treasury funds clear easily but many prime money market funds do not.
Bill funds vs 1-3 year funds are different tools
A 0-3 month bill fund (SGOV, BIL) has near-zero duration: its price barely moves and its yield resets to the current short rate within weeks. A 1-3 year fund (VGSH, SCHO, SHY) carries roughly two years of duration — visible price declines when rates rise, gains when rates fall, and a yield that lags the front of the curve in both directions. The bill funds behave like cash; the 1-3 year funds behave like very short bonds. The published Golden Butterfly allocation on this site uses SHY for its short-term Treasury sleeve; the Permanent Portfolio's cash-equivalent sleeve also names SHY, with BIL and SGOV as closer-to-zero-duration alternates.
Floating-rate notes vs fixed bills
Treasury FRNs are 2-year notes whose coupon resets weekly to the latest 13-week bill auction rate plus a fixed spread. A fund of FRNs (USFR, TFLO) captures the current short rate continuously without rolling maturing bills, while a fixed-bill fund's yield adjusts only as its ladder turns over — a lag of a few weeks to a couple of months. When short rates are rising, the FRN funds reprice upward faster; when rates are falling, the same mechanism works in reverse. The two mechanisms differ mainly in the timing of yield adjustment; the TTM yields across SGOV, BIL, USFR, and TFLO currently sit within a few tenths of a percentage point of each other.
Why these funds score below the headline categories
Distribution profile is the other drag besides the concentration reading: short Treasury funds pay out essentially their entire return as ordinary-income distributions, which the tax-efficiency sub-score reads as a cost. That is accurate as far as it goes — in a taxable account the federal tax bill on the interest is real — but it is the nature of the asset class, not a flaw in any particular fund. Within the category, fee and liquidity are where the funds actually differ.
Common questions
- Is a T-bill ETF the same as a money market fund?
- Close but not identical. Both hold short government paper and yield roughly the front of the curve. A money market fund maintains a fixed $1.00 share price and settles same-day; a T-bill ETF has a (slightly) floating share price and trades like a stock, with normal settlement. The ETF differs in portability across brokerages, typically lower fees, and a US-government-obligation income percentage at or near 100%, which many prime money market funds do not reach.
- Can the share price of a bill fund go down?
- By small amounts, yes. SGOV and BIL hold bills with up to three months of maturity, so a sharp rate move can shift the share price by a few cents, and the price also dips by the distribution amount each ex-dividend date before rebuilding through the month. The holdings are direct obligations of the US Treasury, but these are not fixed-NAV vehicles.
- Why does SGOV score lower than VGSH if it's the bigger, more cash-like fund?
- The composite's concentration sub-score counts top-10 holdings weight, and a ~24-bill ladder concentrates 77% of assets in its ten largest positions, versus 14% for VGSH's ~100-note portfolio. For multi-issuer funds that metric flags real risk; for a single-issuer Treasury fund it mostly measures how short the ladder is. The composite applies the same top-10 metric across all categories; the scoring note above describes why it reads differently here. Within this category, rank differences are driven more by the maturity band a fund targets than by differences among funds in the same band.
Funds are pulled from the live composite for this category. Notes are editorial and refresh with the catalog.
PlainIndex publishes data and editorial commentary — nothing here is personalized investment advice. Read the methodology for how the scores referenced here are computed.