USFR vs SGOV vs BIL vs SHY: Which Treasury Cash Fund Yields More?

Overview

These four securities all provide exposure to U.S. Treasury debt with minimal credit risk, but they differ sharply in maturity profile and interest-rate sensitivity. BIL and SGOV track ultra-short bills maturing in three months or less; SHY extends to the 1–3 year segment; USFR holds floating-rate Treasury notes that reset periodically. The key distinction is duration: the shorter the maturity, the lower the price sensitivity to rate moves, but also the lower the yield pickup and the greater reliance on rolling maturing positions into a changing rate environment.

How they differ

BIL and SGOV both track the money-market end of the Treasury curve but with a key structural gap: SGOV has a larger asset base ($112B versus $48.1B) and a lower expense ratio (0.09% versus 0.1353%), giving SGOV a 0.05% percentage-point advantage on fees. SGOV also offers a slightly higher distribution rate at 3.60% compared to 3.45%.

SHY extends duration meaningfully into the 1–3 year Treasury sector, so it carries higher interest-rate risk—its beta of 0.22 reflects greater price sensitivity than the near-zero betas of the bill funds. That longer duration also supports a similar yield (3.57%) despite a marginally higher expense ratio of 0.15%.

USFR takes a different tack entirely: it holds floating-rate Treasury notes, so its coupons reset periodically with interest rates rather than locking in at issuance. This gives it 3.77% yield and near-zero duration risk (beta of -0.02), making it conceptually closer to money-market funds than to traditional bonds, yet it offers the highest distribution rate among the four.

Who each is best for

• BIL: Fits investors seeking ultra-short Treasury bills with a long operational track record (19 years since 05/25/2007) and minimal rate risk, accepting a modestly higher fee than comparable alternatives.

• SGOV: Designed for investors wanting the lowest expense ratio and largest asset base in the 0–3 month Treasury space, with a similar risk-return profile to BIL but leaner fee drag.

• SHY: Fits portfolios with a modest appetite for duration—investors comfortable with price swings in a 1–3 year band for yield relative to ultra-short alternatives, or those building a ladder across multiple maturity segments.

• USFR: Suited to investors seeking floating-rate income that adjusts with rate resets, with minimal duration risk and the highest current distribution rate among the four, though with a smaller asset base ($19.6B).

Key risks to know

• Reinvestment pressure in falling-rate environments: BIL and SGOV will roll maturing bills into lower-yielding instruments if Treasury rates decline materially. SHY will see bond prices rise (offsetting reinvestment drag) because of its positive duration, while USFR's floating coupons will decline at reset dates, compressing income as rates move lower.

• Floating-rate coupon reset lag in USFR: Floating-rate Treasuries reset on scheduled dates, not continuously. If rates fall sharply between reset dates, holders capture lower coupons immediately. Conversely, if rates spike steeply, the fund captures higher rates only at the next reset, creating timing asymmetry between market conditions and portfolio income.

• Negative convexity for SHY in volatile rate regimes: SHY's 1–3 year duration means price declines accelerate if yields spike (negative convexity), whereas rallies are partially constrained by its shorter maturity band. Over extended high-rate periods, reinvested distributions may compound at lower yields, potentially trailing nominal price appreciation.

• Bill-rollover concentration risk: BIL and SGOV depend entirely on the Treasury's capacity and willingness to issue short-term bills continuously. A fiscal impasse or rare market disruption could impair the liquidity or yield characteristics of the underlying instruments, though such scenarios remain low-probability given Treasury obligations.

Bottom line

If you value the lowest fees and largest asset base in ultra-short Treasuries, SGOV and BIL offer near-zero duration risk and yields around 3.5%, with SGOV holding a fee advantage. If you can tolerate modest price volatility in the 1–3 year Treasury band, SHY provides a similar yield without materially higher fees. If you want income that adjusts with floating-rate resets and can work with a smaller fund, USFR's 3.77% yield addresses rising-rate environments—though its value depends on your outlook for future rate paths and willingness to accept coupon timing asymmetry. Past performance doesn't predict future results.