BIL vs SGOV vs SHY vs USFR: Which Is the Better Pick in 2026?

Overview

These four funds all track short-duration Treasury securities, but they differ materially in maturity profile, duration sensitivity, and fee structure. BIL and SGOV both focus on ultra-short bills (0–3 months), while SHY extends to the 1–3 year Treasury curve, and USFR holds floating-rate Treasury notes. For investors seeking stable, low-volatility income, this group spans the Treasury ladder from cash-equivalent to modest duration risk.

How they differ

The biggest split is maturity: BIL and SGOV hold Treasury bills maturing within three months, while SHY extends to three-year bonds and USFR holds floating-rate notes with longer stated maturities but coupons that reset regularly. This explains SHY's higher beta (0.24 vs. near-zero for the others)—it will move more noticeably when Treasury yields shift, whereas BIL and SGOV are anchored to overnight rates.

SGOV and BIL are nearly twins on strategy but differ slightly in cost and index design. SGOV charges 0.09% versus BIL's 0.14%, and SGOV holds slightly larger AUM ($83.6 billion vs. $50 billion), making it the more economical pure T-bill play. SHY's longer duration and 3.61% yield appeal to investors willing to tolerate some price volatility for a handful of extra basis points. USFR splits the difference: it holds longer-dated paper but its floating coupon structure means principal won't fall if rates rise further—a structural hedge that comes with no duration beta.

Who each is best for

BIL: Investors prioritizing maximum stability and simplicity; those using ETFs as a cash drag in brokerage accounts or seeking parking spots for seasonal cash. The 14-basis-point fee is acceptable only if AUM stability and State Street's operational track record matter more than saving 5 basis points.

SGOV: The default choice for T-bill exposure. Lower fees (9 bps), larger AUM, and identical underlying strategy make it the most efficient pure-bill vehicle; best in taxable accounts where monthly distributions compound.

SHY: Investors with a 1–3 year time horizon who can tolerate modest NAV fluctuation in exchange for yield pickup; also useful as a bond-ladder rung for those building a laddered Treasury position in tax-advantaged accounts.

USFR: Rate-environment hedgers and those expecting further Fed moves. The floating-coupon structure insulates principal from rate shocks; ideal for investors who fear being locked into fixed coupons if yields climb higher.

Key risks to know

• Duration and rate sensitivity: SHY's beta of 0.24 means a 1% Treasury yield rise could cost roughly 2–3% in NAV. BIL, SGOV, and USFR have near-zero duration and won't experience this. For someone holding through a steep rally, SHY could underperform on price.

• Floating-rate reset lag (USFR): Treasury floating-rate notes reset quarterly or semi-annually. In a quickly rising rate environment, coupons adjust with a lag, so USFR won't immediately capture the full benefit of higher overnight rates the way BIL and SGOV do.

• Index roll and turnover: BIL and SGOV must constantly roll maturing bills, incurring transaction costs. In a steep yield curve, rolling into lower-yielding shorter maturities will pressure yield over time; both funds' distributions should trend downward if short rates stay flat or decline.

• AUM and liquidity depth: USFR is the smallest at $17.6 billion. While still liquid, it trades tighter bid-ask spreads. SHY's smaller AUM ($24.7 billion) means wider spreads than the bill funds during volatile tape.

Bottom line

If you want maximum simplicity and lowest cost, SGOV wins hands-down—it's the vanilla T-bill ETF, and the 9-basis-point fee is the market standard. If you're holding a bond position and want duration exposure, SHY offers meaningful yield for tolerable price risk. If you're worried rates will keep rising and you want your principal protected from mark-to-market losses, USFR's floating coupon is the structural answer. Past performance of these funds tracks Treasury yields, not manager skill, so the choice really boils down to your time horizon and what you're hedging against.